Personality traits are typically assumed to predict psychological distress, with little attention paid to the potential influence of psychological distress on personality traits. Recent empirical findings, however, challenge this prevailing view by demonstrating the potential for personality traits to change and suggesting the plausible influence of chronic distress on these traits. This study aimed to examine the mutual within‐person associations between psychological distress and the Big Five personality traits. The primary research question was whether a change in psychological distress is associated with a change in personality traits (and vice versa) after approximately 4 years. A nationally representative sample from Australia (N = 22,837), collected at four time points over 13 years, was used. The random‐intercept cross‐lagged panel model was used to partition variance into between‐person and within‐person components. Results showed that there was no temporal within‐person association between openness and distress. Extraversion and conscientiousness were found to have bidirectional within‐person relationships with distress, suggesting that increases in extraversion and conscientiousness are associated with decreases in distress over time and vice versa. Emotional stability and agreeableness showed unidirectional relationships with distress, with increased distress predicting decreased emotional stability and increased agreeableness predicting decreased distress. Therefore, except for openness, the other traits had at least one significant within‐person link to psychological distress. These findings unveil a reciprocal longitudinal linkage between personality traits and psychological distress, highlighting the potential negative impact of prolonged psychological distress on the developmental trajectory of personality traits.