This study examined the association of students' life satisfaction with mental health risk and perceptions of school functioning (academic and social functioning). Participants were 1348 students (53.5% female) enrolled in grades 4 to 12 in a predominantly non-Latino white and middle-upper class public school district in the northeastern USA. Moderated mediation analyses were performed, and overall life satisfaction (BMSLSS; Huebner et al. "Psychology in the Schools," 41(1), 81-93; 2004b) was tested as a mediator of the relationship between mental health risk (SDQ; Goodman, "Journal of the American Academy of Child and Adolescent Psychiatry," 40, 1337-1345; 2001) and perceptions of school functioning. The main results indicated that overall life satisfaction significantly mediated the relationship between mental health risks and perceptions of academic functioning and social functioning; however, this mediation was specific to internalizing problems. School level moderated this relationship, such that high school students (but not elementary/middle school students) reported that life satisfaction significantly mediated the relationship between higher mental health risk and lower perceptions of school functioning (both academic and social functioning). Results suggest the importance of including measures of life satisfaction in routine school mental health assessments.