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Previous research found that bereavement is associated with several pathological responses affecting both physical and mental health. During the COVID-19 pandemic and the socially disruptive measures implemented, losses of close contacts have occurred under exceptional circumstances, and it is reasonable to expect that many bereaved people would be unable to overcome their loss adaptively, resulting in dysfunctional grief leading to mental health alterations. Loneliness, which has increased during the pandemic, has been identified as a significant risk factor for mental health that is common when people grieve. In this study, we aimed to gauge the effects of bereavement on mental health in the context of the COVID-19 pandemic and to explore the mediating role of loneliness on the relationship between grief and mental health alterations by surveying a representative sample of 2000 Spanish adults interviewed by phone during the pandemic (February-March 2021). Logistic regressions were performed to examine the effects of grief levels on depression, anxiety, panic attacks, post-traumatic stress disorder, substance abuse, and suicidal thoughts and behaviors. Our results confirmed that how the loss of a loved one is processed is associated with the development of mental health conditions. Dysfunctional grief was significantly associated with all mental health conditions, particularly depression (OR = 14.28) and anxiety (OR = 11.61). As predicted, loneliness accounted for a substantial percentage (8-30%) of the impact of grief on mental health outcomes.