Background: Many countries make many of their governmental sectors private. This transition, however, may affect their employees in numerous ways.

Objective: To determine the level of occupational stress and mental health of employees of a petrochemical company in Isfahan, Central Iran, before and 3 months after privatization.

Methods: Out of the 700 employees of the studied company, using a stratified random sampling technique, 140 persons were selected. We used Steinmetz occupational stress and GHQ-28 questionnaires to determine the level of stress and mental health status of participants.

Results: The reliability of the questionnaires used was acceptable (Chronbach alpha coefficients: 0.85 and 0.86, respectively). Job stress level was significantly increased 3 months after privatization; the mean±SD job stress score before and after privatization were 22.9±10.43 and 28.3±12.25, respectively (p<0.001). The mean±SD mental health score after privatization (17.57±11.63) was also significantly (p<0.001) higher than that before the privatization (13.8±6.0). There was a significant (p<0.001) positive correlation between the mental health status score and job score (r=0.476).

Conclusion: After privatization, the job stress of employees increased significantly. This increase was associated with a decrease in mental health. To lessen the side effects of privatization, the process should be performed cautiously.