Participation in leisure activities is an important arena for the positive psychological development of adolescents. The present study set out to examine the relationship between adolescents' satisfaction of the psychological needs for competence, relatedness, and autonomy in their participation in leisure activities and their perceived life satisfaction. The aim was to identify the extent to which satisfaction of the three needs explained the relationship between participation in leisure activities and life satisfaction. These proposed mechanisms were based on previous empirical work and the theoretical frameworks of self-determination theory, and were tested in a nationally representative sample of Norwegian adolescents (N = 3,273) aged 15 and 16 years (51.8 % boys). The structural equation analysis showed that competence and relatedness satisfaction fully mediated the association between participation in activities and life satisfaction. Autonomy satisfaction had a direct positive effect on life satisfaction but did not show any mediation effect. The positive processes of psychological need satisfaction, and especially the need for competence and relatedness, experienced in the leisure activity domain thus seem to be beneficial for adolescents' well-being. These findings add to previous research investigating the positive impact of need satisfaction in other important domains in the lives of children and adolescents.