AbstractParents and caregivers who participate in regular physical activity have improved physical and mental health and can influence the physical activity behaviors of children in their care. This study aimed to assess the association between psychological distress and physical activity levels of parents/caregivers in New South Wales, Australia during different COVID‐19 restriction periods. A repeat‐cross‐sectional design was adopted. Parents/caregivers involved in a government‐led children's sport and recreation voucher program were recruited to participate in an online survey as part of the program's evaluation. In response to COVID‐19, parents and caregivers' psychological distress and physical activity levels were assessed using validated items. Binary logistic regression models were used to examine the relationship between physical activity and probable mental illness, and differences across different COVID‐19 restriction periods in 2020 and 2021. In 2020, 10,990 parents/caregivers responded to survey questions and in 2021, 17,106 parents/caregivers responded. Parents/caregivers who were physically active on 7 days per week had lower odds of reporting high psychological distress (odds ratio [OR]: 0.40, 95% confidence interval [CIs]: 0.33, 0.49) than parents/caregivers physically active on fewer days per week. In 2020 9.8% of parents/caregivers (n = 1076) reported high psychological distress, which decreased to 8% in 2021 (n = 1366). In 2021, parents/caregivers had lower odds of reporting high psychological distress (OR: 0.79, 95% CIs: 0.72, 0.86). Socioeconomic disadvantage negatively impacted psychological distress and physical activity levels. Australian parents and caregivers who reported high psychological distress, during and after COVID‐19 restrictions, were participating in low levels of physical activity. Greater collaboration between the mental health, and sport and recreation sectors is recommended to harness the co‐benefits of physical activity throughout parenthood, particularly in low socioeconomic areas.