Introduction: The COVID-19 pandemic has significantly impacted global mental health, particularly during successive waves of infection. This study aimed to assess psychosocial factors among individuals voluntarily seeking COVID-19 testing during the third wave in a district of Central India, focusing on knowledge, attitudes, practices, psychological distress, and coping strategies. Methods: A cross-sectional, mixed-methods study was conducted over 6 months, involving 384 participants who voluntarily underwent COVID-19 testing. Quantitative data were collected using structured questionnaires including COVID-19 KAP, DASS-21, IES-R, Brief COPE Inventory, and OSS-3. Qualitative data were gathered through 30 in-depth interviews. Data were analyzed using descriptive and inferential statistics, and thematic analysis. Results: Participants demonstrated moderate to good COVID-19 KAP scores. Significant levels of psychological distress were observed, with 30.2%, 34.9%, and 27.6% reporting moderate to severe levels of depression, anxiety, and stress, respectively. COVID-19-related stress was moderate to severe in 28.1% of participants. Adaptive coping strategies such as active coping, planning, and acceptance were prevalent. Higher knowledge scores correlated with lower psychological distress. Social support emerged as a protective factor against psychological distress. Conclusion: The study reveals complex interactions between COVID-19 knowledge, psychological distress, and coping strategies among individuals seeking voluntary testing. While demonstrating resilience through adaptive coping, participants showed significant psychological impact. Findings underscore the need for targeted mental health interventions, continuous public health education, and strategies to enhance social support during prolonged pandemic conditions.