Mental distress influences health status, treatment effectiveness, and the quality of care received by hospitalized inpatients. Globally, mental health problems account for 13% of the total burden of disease. Since studies about it are scarce in Ethiopia and not done in the south Gondar zone, we conducted this study. A prospective institution-based cross-sectional study was conducted in south Gondar Zone public hospitals via interviews. In the present study, the prevalence of mental distress was 41.7%. Patients admitted to the hospital and previous alcohol users (AOR = 2.19}) and tobacco users (AOR = 5.60}) were more likely to develop mental distress than non-alcohol and tobacco users in a multivariable logistic regression analysis. Having a previous psychiatric history, AOR = 11.622, and a hospital stay of one to two weeks, AOR = 2.57, were more likely to develop mental distress than those who didn't have a previous psychiatric history and those who had a hospital stay of more than or equal to three weeks. Age groups 18-39, AOR = 0.076, and 40-59, AOR = 0.264, are less likely to develop mental distress as compared to those ≥ 60 years old. This study reveals a high prevalence of mental distress among patients in medical and surgical wards. The Ethiopian Ministry of Health, the Amhara Regional Health Bureau, the South Gondar Zone Health Office, and Debre Tabor University shall give due attention.