Background. Chronic stress is associated with a multitude of psychopathological disorders that share similar alterations in neural dynamics and symptomatology. Applying the National Institute of Mental Health’s Research Domain Criteria (RDoC) framework, we probed the stress-diathesis model by identifying how a transdiagnostic psychosocial distress index representing high-dimensional patterns of stress-related aberrations was coupled to the neural oscillatory dynamics serving abstract reasoning. Methods. The sample consisted of 69 adults (mean age=44.77 years, SD=13.66) who completed the NIH Toolbox Emotion Battery (NIHTB-EB) and a matrix reasoning task during magnetoencephalography (MEG). A transdiagnostic psychosocial distress index was computed using exploratory factor analysis with assessments from the NIHTB-EB. Whole-brain correlations were conducted using the resulting psychosocial distress index for each oscillatory response, and the resulting peak voxels were extracted for mediation analyses to assess the degree to which neural oscillatory activity mediates the interplay between perceived stress and psychosocial distress. Results. We found that elevated psychosocial distress was associated with blunted oscillatory alpha/beta and gamma responses in key cortical association regions. Further, we found that only alpha/beta activity in the right superior temporal sulcus partially mediated the relationship between perceived stress and psychosocial distress. Conclusions. The present study is among the first to couple perceived stress and psychosocial distress with alterations in oscillatory activity during a matrix reasoning task. These findings illuminate the relationship between perceived stress and neural alterations associated with psychopathology.