Background The role of one's social network in the process of becoming health literate is not well understood. We aim to explain the ‘distributed’ nature of health literacy and how people living with a long‐term condition draw on their social network for support with health literacy‐related tasks such as managing their condition, interacting with health professionals and making decisions about their health. Design This paper reports a longitudinal qualitative interview and observation study of the development and practice of health literacy in people with long‐term health conditions, living in South Wales, UK. Participants were recruited from health education groups (n = 14) and community education venues (n = 4). The 44 interview transcripts were analysed using the ‘Framework’ approach. Results Health literacy was distributed through family and social networks, and participants often drew on the health literacy skills of others to seek, understand and use health information. Those who passed on their health literacy skills acted as health literacy mediators and supported participants in becoming more health literate about their condition. The distribution of health literacy supported participants to manage their health, become more active in health‐care decision‐making processes, communicate with health professionals and come to terms with living with a long‐term condition. Participants accessed health literacy mediators through personal and community networks. Conclusion Distributed health literacy is a potential resource for managing one's health, communicating with health professionals and making health decisions.