Extant literature investigates the impact of COVID-19 on mental health outcomes, however there is a paucity of work examining mental health distress as a risk factor for COVID-19 outcomes. While systemic variables like income inequality relate to both mental health and COVID-19, more work is needed to test theoretically informed models including such variables. Using a social-ecological framework, we aimed to address these gaps in the literature by conducting a neighborhood-level analysis of potential mental health distress and systemic- (income inequality) level predictors of reported COVID-19 infection and mortality over time in Chicago. Neighborhood-level comparisons revealed differences in mental health distress, income inequality, and reported COVID-19 mortality, but not reported COVID-19 infection. Specifically, Westside and Southside neighborhoods generally reported higher levels of mental health distress and greater concentration of poverty. The Central neighborhood showed a decline in reported mortality rates over time. Multi-level negative binomial models established that Zip-codes with greater mental health distress were at increased reported COVID-19 infection risk, yet lower mortality risk; Zip-codes with more poverty were at increased reported COVID-19 infection risk, yet lower mortality risk; and Zip-codes with the highest percentage of People of Color were at decreased risk of reported COVID-19 mortality. Taken together, these findings substantiate Chicago neighborhood-level disparities in mental health distress, income inequality, and reported COVID-19 mortality; identify unique differential associations of mental health distress and income inequality to reported COVID-19 infection and reported mortality risk; and, offer an alternative lens towards understanding COVID-19 outcomes in terms of race/ethnicity.