Pathological anxiety towards an exam intensifies psychological distress and reduces academic motivation. The present study aimed to identify the prevalence of test anxiety and psychological distress. Additionally, the present study examined the extent to which test anxiety predicts psychological distress and academic motivation. Westside Text Anxiety Scale (WTAS), Kessler Psychological Distress Scale (K-10) and Academic Motivation Scale (AMS) were administered among 154 first year undergraduate medical students attending a private university in Malaysia. The results showed that 18.2 (n = 28) percent of medical students experienced test anxiety and 53.9 (n = 83) percent of them were psychological distressed. Further, results showed that test anxiety positively correlated with psychological distress and amotivation. Test anxiety is a significant predictor of psychological distress and amotivation. Over all, medical students who experience test anxiety tend to experience high psychological distress and amotivation in their studies.