Participation in social activities often has beneficial effects on mental health among older adults, although the reasons why this is true (i.e., mechanisms or mediators) have received less empirical attention. The objective of this study is to examine whether involvement in social activities is associated with less psychological distress because it fosters social engagement. We explored this hypothesis with a sample of 1089 community dwelling Canadians ranging in age from 65 to 93 who completed a cross-sectional online survey that included measures of social participation (i.e., number of activities, time spent in them, and volunteerism), social engagement (i.e., the number of friends and family they see, feel close to, and can discuss personal matters with), and psychological distress. Mediation analyses confirmed our hypothesis that participation in social activities had beneficial effects on psychological distress through social engagement. That is, individuals who participated in greater numbers of social activities were more likely to report social engagement, and greater social engagement was associated with less psychological distress. In addition, when we controlled for the effect of social engagement, involvement in greater numbers of social activities was associated with greater distress. Our findings suggest that social engagement is a reason why participation in social activities has benefits for older adults' mental health, and that increasing engagement, both within and outside of typical social activities, is a worthwhile target for efforts to improve mental health among the growing older adult population.