BACKGROUND: The socioeconomic impact of the COVID-19 pandemic has severely affected individuals' mental health. However, the factors that mitigate or exacerbate the mental health effects of economic deterioration remain underexplored. OBJECTIVE: This paper analyzes survey data from the second wave of the COVID-19 pandemic in Japan, a period during which women workers were reported to be economically and psychologically vulnerable. The analysis examined factors that mitigate or amplify the impact of COVID-19-induced economic deterioration on mental health, testing 3 hypotheses based on the conservation of resources theory and the stress buffering model: the negative impact of economic deterioration on mental health is greater for individuals with less social support compared to those with more social support (hypothesis 1); the negative impact of economic deterioration on mental health is greater for individuals experiencing more negative interactions compared to those experiencing fewer (hypothesis 2); and the buffering effect of social support is stronger in women than in men, with women receiving less social support experiencing greater mental health impacts from economic deterioration (hypothesis 3). METHODS: A web-based survey was conducted by an internet research company in Japan from June to July 2020. A balanced sample of 250 men and 250 women was recruited from each of the following age groups: 20-29, 30-39, 40-49, 50-59, 60-69, and 70-79 years. The analysis focused on working men and women aged 20-50 years (n=1238). Psychological distress was measured using the K6 scale. Economic deterioration was defined as a decrease in income compared to the prepandemic levels, and scales for social support and negative interactions were included. Logistic regression analysis was performed, using K6≥9 as the dependent variable, with interaction terms for each hypothesis sequentially incorporated. RESULTS: In the best-fitting model determined by the Bayesian Information Criterion, a significant association was observed between the interaction of COVID-19-induced economic deterioration and social support with K6 scores (odds ratio [OR] 0.90, 95% CI 0.81-0.99). However, in other models, the interaction between economic deterioration and negative interactions (OR 1.01, 95% CI 0.90-1.13) as well as the 3-way interaction involving economic deterioration, social support, and gender (OR 1.13, 95%CI 0.92-1.39) were not significant. The average marginal effect of economic deterioration was statistically significant for social support scores ranging from 4 to 10. The average marginal effect was 0.11 when social support was 4 (95% CI 0.03-1.20; P=.009) and 0.028 when social support was 10 (95% CI 0.00-0.06; P=.047). CONCLUSIONS: The adverse impact of economic deterioration on mental health was more pronounced among individuals with lower levels of social support. These findings support hypothesis 1.