BACKGROUND Mental distress is a common finding among University students. Empirical research has confirmed that the University student population has a higher prevalence of mental disorder than the general population. However, no previous study has examined the mental health conditions of students in Somaliland. METHODS An institution based cross-sectional study was conducted on a sample of 570 undergraduate students at the University of Hargeisa in October, 2013. Study subjects were selected using a stratified random sampling. The Self-reporting questionnaire (SRQ-20) was used to assess mental distress. Multiple logistic regression analysis was carried out to identify factors independently associated with mental distress. RESULTS The point prevalence of mental distress was found to be 19.8%. Mental distress was associated with being female (AOR = 3.52, 95% CI 1.94, 6.39), having a monthly income of 100 United States dollars (USD) or less (AOR = 2.19, 95% CI 1.12, 4.28), and not having a satisfying relationship with the family (AOR = 11.52, 95% CI 3.18, 41.72) and friends (AOR = 7.33, 95% CI 2.83, 18.93). Nearly one in five students (18.6%) has been using Khat in the previous 12 months. Khat use was also associated with greater likelihood of mental distress (AOR = 2.87, 95% CI 1.26, 6.56). In addition, financial difficulties and the poor prospect of finding a job were common sources of stress among the students. CONCLUSIONS A significant proportion of the students at the University of Hargeisa suffer from mental distress which might have a detrimental effect on their academic performance. The mental health needs of the University students require attention with special emphasis on female students, students experiencing financial hardships, students who use Khat and those who have interpersonal problems.