Background: People with mental illness who internalize stigma often experience reduced self-esteem and impaired quality of life (QOL).Aims: To propose a theoretical model in which self-esteem mediates the effects of internalized stigma on the multidimensional domains comprising QOL.Method: In 403 inpatients and outpatients (DSM-IV, American Psychiatric Association, 1994), from hospital-based and community mental health facilities, self-report measures of internalized stigma (ISMI), self-esteem (RSES) and QOL (WHOQOL-Bref) were administrated.Results: Structural equation modeling results supported the proposed model. Self-esteem fully mediated the relation between internalized stigma and the physical and the social relationships domains, and partially mediated the relationship between internalized stigma and psychological, environment and level of independence QOL domains. Such results provided empirical support and shed light upon previous research. Specifically the results emphasize the mediating role that self-esteem plays in the degree to which internalized stigma exerts a negative effect on specific QOL domains.Conclusions: Self-esteem appears to be a core element in reducing the negative effects of internalized stigma on aspects of QOL among people with mental illness. These findings suggest there is a crucial impact regarding clinical mental health interventions along with important theoretical implications.