Social inequalities in psychological status have been attributed to health selection and to social causation. We used data from the 1958 British birth cohort, followed over three decades, to identify causes of inequality in adulthood. Psychological status prior to labour market entry influenced inter-generational mobility, but selection effects were weaker for intra-generational mobility, between age 23 and 33. However, selection failed to account for social differences in risk of distress of approximately threefold in classes IV&V compared with I&II. Both childhood and adult life factors appeared to contribute to the development of inequalities. The principal childhood factors were ability at age 7 for both sexes and adverse environment (institutional care for men and low class for women). Adult life factors varied, with stronger effects for work factors (job strain and insecurity) for men and qualifications on leaving school, early child-bearing and financial hardship for women. Gradients in psychological distress reflect the cumulative effect of multiple adversities experienced from childhood.