Introduction: Internet is one of the most popular forms of media, but heavy use may result in negative effects like decreased self-esteem. New and unexpected life changes in medical students cause increased perception of stress leading to internet addiction as a way of coping. The purpose of this study was to assess the prevalence of internet addiction in medical students, to assess the level of perceived stress and self-esteem in them, and to obtain the correlation between internet addiction with perceived stress as well as self-esteem. Various coping strategies implemented by students using internet were found. Methodology: A cross-sectional study with 200 students recruited by stratified random sample technique was undertaken. After taking informed consent, participants were assessed on Young's internet Addiction Test (YIAT-20), Rosenberg's Self-Esteem Scale, Cohen's Perceived Stress Scale-10, and Brief COPE Scale. Two groups were made using YIAT-20, those having internet addiction and those without, the two being compared. Results and Discussion: Mean age of medical students was 19.16 years (±1.45). Meantime of internet usage was 107.15 min (±67.99) per student per day. The prevalence of internet addiction was 18%. The group of students that had internet addiction showed high perceived stress (P = 0.001) and low self-esteem (P < 0.0001). Internet use had a positive correlation with perceived stress (r = 0.2866) and a negative correlation with self-esteem (r = −0.2918). Students with internet addiction used more emotion-based coping skills rather than task-oriented coping skills (P = 0.0032). Conclusions and Implications: Medical students having internet addiction were found to have higher levels of perceived stress, lower levels of self-esteem and predominantly emotion-based coping skills when compared to students having average internet use who have task-oriented coping skills.