Happiness is a fundamental characteristic of life, helping individuals to become healthy and productive members of society. Pakistan has been ranked as the 67th happiest country out of 156 countries in the world. Self-compassion (SC) and empathy are considered some of the finest emotions and moral values of human beings leading to a happier life. This is the first study in South Asia that examined self-compassion as a moderator between empathy and happiness. Furthermore, we also determined self-compassion and empathy as predictors of happiness among late adolescents. Data collected from 566 students, selected randomly from different educational institutions in Lahore, suggested that self-compassion (r = 0.273) and empathy (r = 0.131) had a significant positive relationship with happiness. Self-compassion and empathy both significantly predicted happiness. Male adolescents had slightly higher self-compassion and mindfulness than females. Self-compassion (F (3, 562) = 29.74, p = 0.000) was found to significantly moderate the relationship between empathy and happiness. Self-compassion can be highly beneficial to relate to oneself, specifically for adolescents who are involved in developing their identities and self-worth, and it makes their transition from adolescence to adulthood easy.