Background: Few studies have examined the potentially beneficial role of positive psychological functioning in individuals with chronic pain. This study examined the relationship of psychological well-being (PWB) to pain and disability in women with fibromyalgia (FM) as compared to women with rheumatoid arthritis (RA) and healthy controls (HC). We targeted several domains of PWB that have been associated with health, and also tested whether PWB was related to the women’s social network. Methods: PWB, pain, and disability were assessed in 125 women (57 with FM, 20 with RA, and 48 HC) on two occasions. Results: Women with FM reported lower overall PWB than did RA and HC women. Further, greater PWB was associated with less disability and fatigue, but not pain in women with FM. Self-acceptance, environmental mastery, purpose in life, and positive relations with others emerged as four important constructs in the association between PWB and disability. In addition, PWB mediated the relationship between social network size and disability. Conclusions: This assessment of PWB provides insight into those psychological domains that should be emphasized in treatments aimed at reducing the disabling aspects of FM.