The current study investigated whether young adults' tendency to engage in autobiographical reasoning that described the self in positive and negative ways moderated: (1) the relationship between the amount and complexity of autobiographical reasoning in narratives of high and low points and psychological functioning, (2) the relationship between beliefs about the centrality of negative life events (low points) and psychological functioning. Narratives of life story high and low points, collected from 98 young adults, were coded for two types of autobiographical reasoning: self-event connections and sophistication of meaning. Participants also completed a measure of psychopathology and a measure of psychological well-being, and rated the centrality of each narrated event. Results showed that making more self-event connections and gaining more complex insights into the self was associated with higher levels of psychopathology for young adults who tended to reason about the self in negative ways. Further, endorsing low points as central to identity was associated with psychopathology and poor psychological well-being, but not for young adults who were more likely to reason about the self in positive ways in narratives of these difficult experiences. Results are discussed in terms of the implications for the relationship between psychological functioning and life story development.