Abstract Background Notwithstanding the firmly established cross-sectional association of happiness with psychiatric disorders and their symptom severity, little is known about their temporal relationships. The goal of the present study was to investigate whether happiness is predictive of subsequent psychiatric disorders and symptom severity (and vice versa). Moreover, it was examined whether changes in happiness co-occur with changes in psychiatric disorder status and symptom severity. Methods In the Netherlands Study of Depression and Anxiety (NESDA), happiness (SRH: Self-Rated Happiness scale), depressive and social anxiety disorder (CIDI: Composite Interview Diagnostic Instrument) and depressive and anxiety symptom severity (IDS: Inventory of Depressive Symptomatology; BAI: Beck Anxiety Inventory; and FQ: Fear Questionnaire) were measured in 1816 adults over a three-year period. Moreover, we focused on occurrence and remittance of 6-month recency Major Depressive Disorder (MDD) and Social Anxiety Disorders (SAD) as the two disorders most intertwined with subjective happiness. Results Interindividual differences in happiness were quite stable (ICC of .64). Higher levels of happiness predicted recovery from depression (OR = 1.41; 95% CI = 1.10–1.80), but not social anxiety disorder (OR = 1.31; 95%CI = .94–1.81), as well as non-occurrence of depression (OR = 2.41; 95%CI = 1.98–2.94) and SAD (OR = 2.93; 95%CI = 2.29–3.77) in participants without MDD, respectively SAD at baseline. Higher levels of happiness also predicted a reduction of IDS depression (sr = − 0.08; 95%CI = -0.10 - -0.04), and BAI (sr = − 0.09; 95%CI = -0.12 - -0.05) and FQ (sr = − 0.06; 95%CI = -0.09 - -0.04) anxiety symptom scores. Conversely, presence of affective disorders, as well as higher depression and anxiety symptom severity at baseline predicted a subsequent reduction of self-reported happiness (with marginal to small sr values varying between −.04 (presence of SAD) to −.17 (depression severity on the IDS)). Moreover, changes in ...