Objective Although Conscientiousness/disinhibition plays a substantial role in internalizing and externalizing psychopathology, the underlying mechanisms are not well understood. We aim to clarify facet‐level associations and to examine whether (a) impairment mediates the link of Conscientiousness with internalizing and externalizing symptoms, and (b) demoralization (assessed via Neuroticism) accounts for their associations. Method A total of 450 participants (Mage = 42; primarily female and Caucasian) who reported current/recent psychiatric treatment completed two measures of domain‐ and facet‐level traits (i.e., NEO‐PI‐3, PID‐5), as well as interview measures of impairment and disorders. Correlation, regression, and mediation analyses were conducted. Results Internalizing disorders (and particularly, the distress disorders) were uniquely associated with facets related to low self‐efficacy, whereas externalizing disorders were uniquely associated with risk‐taking and disregarding rules. For the internalizing disorders only, these associations were reduced after accounting for Neuroticism, though associations with distress disorders remained significant. Impairment mediated the link between Conscientiousness and symptoms for internalizing disorders, but not consistently for externalizing disorders. Conclusions The internalizing and externalizing disorders are associated with Conscientiousness due to different facet‐level content. Demoralization and impairment both contribute to the link between internalizing disorders and Conscientiousness, whereas neither process accounts substantially for the relation of externalizing disorders with Conscientiousness.