BACKGROUND: Approximately 25% of the world's population consists of young people. The experience of violence peaks during adolescence and the early adult years. A link between personal experience of violence and mental health among young people has been demonstrated but rural-urban differences in these associations are less well known in low to middle income countries. The aim of this study was to investigate the associations between interpersonal violence and psychological distress among rural and urban young women. METHODS: Data on experiences of violence and psychological distress were collected from a total of 926 non-pregnant young women aged between 18 and 22 years of age in rural and urban sites in South Africa. The General Health Questionnaire-28 was used to assess psychological distress as an indicator of mental health. Generalised structural equation models were employed to assess potential pathways of association between interpersonal violence and psychological distress. RESULTS: Thirty-four percent of the urban young women (n=161) reported psychological distress compared to 18% of rural young women (n=81). In unadjusted analysis, exposure to interpersonal violence doubled the odds of psychological distress in the urban adolescents and increased the odds 1.6 times in the rural adolescents. In adjusted models, the relationship remained significant in the urban area only (OR 1.84, 95% CI 1.13-3.00). Rural residence seemed protective against psychological distress (OR 0.41, 95% CI 0.24-0.69). Structural equation modelling did not reveal any direct association between exposure to interpersonal violence and psychological distress among rural young women. Stressful household events were indirectly associated with psychological distress, mediated by violence among young women in the urban area. CONCLUSION: The relationship between violence and psychological distress differs between urban and rural-residing young women in South Africa, and is influenced by individual, household and community (contextual) factors.