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Objective As a result of the pandemic of COVID‐19, the public have been experiencing psychological distress. However, the prevalence of psychological distress during the COVID‐19 pandemic remains unknown. Our objective was to evaluate the prevalence of psychological distress during COVID‐19 outbreak and their risk factors, especially their internal paths and causality. Methods A nationwide cross‐sectional survey of the prevalence of mental disorders was conducted. We used Hospital Anxiety and Depression Scale (HADS) to estimate the prevalence of anxiety and depression. The internal paths and the causality of the psychological health were analyzed using a structural equation modeling (SEM) approach. Results A total of 24,789 respondents completed the survey. We found that the overall prevalence of anxiety, depression, combination of anxiety, and depression were 51.6% (95% CI: 51.0–52.2), 47.5% (95% CI: 46.9–48.1), and 24.5% (95% CI: 24.0–25.0), respectively. The risk of psychological disorders in men was higher than that in women. The status of psychological health was different across different age groups, education levels, occupations, and income levels. The SEM analysis revealed that inadequate material supplies, low income, low education, lack of knowledge or confidence of the epidemic, and lack of exercise are major risk factors for psychological distress. Conclusions The evidence from this survey poses serious challenges related to the high prevalence of psychological distress, but also offers strategies to deal with the mental health problems caused by the COVID‐19 pandemic., In national cross‐sectional survey with largest participants in china, we pose serious challenges related to the high prevalence of psychological distress, find out major risk factors for them, and then offer evidence‐based strategies to deal with the mental health problems caused by the COVID‐19 pandemic. Our research also provides evidences for other countries suffering from the COVID‐19 to take public health interventions to relieve the public psychological pressure.