Stress is a common experience in modern society, and it can affect both physical and mental health. Recognizing that not all stress is detrimental to health, this research examines the relationship between perceptions of distress and perceived health within a longitudinal framework. Using two waves of a nationally representative panel study, the National Health and Nutrition Examination Survey I (NHANES I), structural equation modeling revealed that distress leads to more negative health perceptions. In addition, perceived health was found to impact distress levels at the following wave suggesting a cycle of decline between distress and perceived health. Finally, perceived health was found to have predictive validity in determining future functional disability even when considering distress.