Objective To examine the potential mediating role of body image dissatisfaction on the association between treatment‐related scarring/disfigurement and psychological distress in adult survivors of childhood cancer. Methods Participants included 1714 adult survivors of childhood cancer (mean [SD] age at evaluation = 32.4 [8.0] years, time since diagnosis = 24.1 [8.1] years) enrolled in the St. Jude Lifetime Cohort Study. Survivors completed measures of body image, emotional distress, and posttraumatic stress symptoms (PTSS). Body image dissatisfaction (BID) was categorized into 2 groups (cancer‐related and general) based on factor analysis. Using causal mediation analysis, we estimated the proportion of psychological distress associated with treatment‐related scarring/disfigurement that could be eliminated by resolving BID through a hypothetical intervention. Results Among survivors with scarring/disfigurement of the head, a sizable proportion of the relative excess of psychological distress could be eliminated if BID was successfully treated (males: [cancer‐related BID: depression: 63%; anxiety: 100%; PTSS: 52%]; [general BID: depression: 70%; anxiety: 100%; PTSS: 42%]; females: [cancer‐related BID: depression: 20%; anxiety; 36%; PTSS: 23%]; [general BID: depression: 32%; anxiety: 87%; PTSS: 38%]). The mediating effect of BID was less pronounced for the association between scarring/disfigurement of the body and psychological distress for both males and females. Conclusions Body image dissatisfaction mediates the association treatment‐related scarring/disfigurement and psychological distress among adult survivors of childhood cancer, particularly among survivors with scarring/disfigurement of the head and male survivors. Successful treatment of body image dissatisfaction has the potential to eliminate a substantial proportion of psychological distress related to scarring/disfigurement among adult survivors of childhood cancer.