Psychopathology is posited to be transdiagnostically linked to chronic stress. Yet efforts to understand the specificity and directionality of these links have been sparse, and the ubiquitous comorbidity of psychopathology has made the seemingly nonspecific links between psychological disorders and chronic stress difficult to interpret. The current study used a latent dimensional bifactor model of psychopathology to account for comorbidity and a multiwave prospective design to disentangle temporal associations between psychopathology and chronic stress longitudinally during the critical adolescent period for psychopathology risk and stress reactivity. A community sample of 567 youth (55.5% female, age M = 11.8 at baseline, M = 15.1 at end of study) were followed prospectively for 3 years, with chronic stress assessed with the Youth Life Stress Interview and psychopathology symptoms assessed via both self and parent report. Exposure to chronic stress predicted what is common across forms of psychopathology (the p factor), which in turn predicted generation of chronic stress over time. After accounting for comorbidity via the p factor, externalizing behaviors also had specific transactional links to chronic stress, whereas links between internalizing psychopathology and chronic stress were completely accounted for by common psychopathology. The results provide the first direct evidence that chronic stress is transdiagnostically and reciprocally linked to psychopathology, during a critical youth period for psychopathology onset and stress reactivity.