AbstractThere is currently an unprecedented number of forcibly displaced people worldwide. Little is known, however, about how external stressors and internal coping strategies intersect to influence mental health in displaced refugees, particularly whether specific types of coping strategies are more or less effective across different levels of external stress. This study aimed to understand whether positive and negative internal coping strategies were differentially associated with mental health across high and low levels of external stressors in displaced refugees. Participants were 1,216 refugees living in Indonesia who completed an online survey indexing demographic characteristics, exposure to ongoing stressors, positive psychological coping strategies (i.e., cognitive flexibility, self‐efficacy, and hope), negative psychological coping strategies (i.e., rumination and intolerance of uncertainty), psychological symptoms (i.e., posttraumatic stress disorder, depression, and anxiety) and mental health‐related quality of life. Participants (27.3% female, Mage = 30.52 years) were from Arabic‐, Farsi‐, Tamil‐, Somali‐, Dari‐, and English‐speaking backgrounds. Results of latent moderated structural equation modeling indicated that the association between negative psychological coping strategies and poorer mental health was stronger at higher levels of stress, whereas the association between positive psychological coping strategies and better quality of life was stronger at lower levels of stress. These findings provide evidence in support of tailored approaches that integrate interventions addressing external stressors and internal coping strategies to support positive mental health and enhanced quality of life in displaced refugees.