BACKGROUND: Research on mental health disparities by race-ethnicity in the United States (US) during COVID-19 is limited and has generated mixed results. Few studies have included Asian Americans as a whole or by subgroups in the analysis. METHODS: Data came from the 2020 Health, Ethnicity, and Pandemic Study, based on a nationally representative sample of 2,709 community-dwelling adults in the US with minorities oversampled. The outcome was psychological distress. The exposure variable was race-ethnicity, including four major racial-ethnic groups and several Asian ethnic subgroups in the US. The mediators included experienced discrimination and perceived racial bias toward one's racial-ethnic group. Weighted linear regressions and mediation analyses were performed. RESULTS: Among the four major racial-ethnic groups, Hispanics (22%) had the highest prevalence of severe distress, followed by Asians (18%) and Blacks (16%), with Whites (14%) having the lowest prevalence. Hispanics' poorer mental health was largely due to their socioeconomic disadvantages. Within Asians, Southeast Asians (29%), Koreans (27%), and South Asians (22%) exhibited the highest prevalence of severe distress. Their worse mental health was mainly mediated by experienced discrimination and perceived racial bias. CONCLUSIONS: Purposefully tackling racial prejudice and discrimination is necessary to alleviate the disproportionate psychological distress burden in racial-ethnic minority groups.