Objective Children with reading difficulties are at elevated risk for externalising (e.g., conduct disorder) and internalising (e.g., anxiety and depression) mental health problems. Reading ability is also negatively associated with self‐esteem, a consistent predictor of child and adolescent mental health more broadly. This study examined whether self‐esteem moderated and/or mediated relationships between reading ability and mental health. Method One hundred and seventeen children (7–12 years) completed standardised reading assessments (Castles and Coltheart Test 2; CC2) and self‐report measures of mental health (Strengths and Difficulties Questionnaire; SDQ) and self‐esteem (Coopersmith Self‐esteem Inventory). Non‐verbal intelligence (IQ) was measured using the block design and matrix reasoning subscales of the Wechsler Abbreviated Scale of Intelligence, and was controlled for in all multivariate analyses. Results Reading ability was negatively associated with internalising symptoms. This relationship was not moderated by self‐esteem. Poor readers also reported more total difficulties and externalising symptoms, but only at low levels of self‐esteem. There was no evidence that self‐esteem mediated relationships between reading ability and mental health. Conclusions Poor reading was associated with internalising symptoms. Self‐esteem moderated the impact of reading ability on total difficulties and externalising symptoms, with high self‐esteem buffering against negative impacts of poor reading. However, the reliability of the self‐esteem scale used in the study was poor and findings need replication using a reliable and valid self‐esteem measure, as well as other measures of child mental health. If replicated, future research should examine whether interventions aiming to improve self‐esteem can reduce the risk of externalising problems in children with reading difficulties.