Previous research has shown high prevalence rates for stress and psychiatric morbidity in rural areas of Pakistan, but prevalence findings from urban areas vary widely (between 18 and 70%). Many of these studies have focused on special populations and may not be representative of the general population in urban settings. The purpose of the present study was to ascertain prevalence and predictors of psychological distress in a representative sample of community dwelling adults from mid-low to low-income urban areas of Karachi, Pakistan. A cross-sectional survey was undertaken utilizing probability-based sampling from five mid-low to low-income communities of Karachi. Measures included the twelve-item Urdu version of general health questionnaire (GHQ-12), a demographic questionnaire, and questions about financial, health-related and family problems and about access to services and material amenities owned. Seventeen per cent of respondents (N = 1,188) were positive for psychological distress. More females were distressed than males and migrant groups had higher prevalence of distress as compared with natives of the city. Although other studies have shown low education or income to be associated with emotional distress and non-psychotic psychiatric morbidity, our study suggested that having limited income or education may make one more vulnerable to social problems that in turn may be associated with greater distress. An access to services and material amenities had a small but significant association with decreased distress. The overall national prevalence rates may not reveal the influence of gender, region (rural v. urban) and migration on psychological distress. Further research is needed to address mental health of migrant groups in urban centers of Pakistan.