The study by the University of East Anglia and the Centre for Diet and Activity Research (CEDAR) shows that people who stopped driving and started walking or cycling to work benefited from improved wellbeing.
In particular, active commuters were better able to concentrate and were less under strain than if they travelled by car, researchers said.
These benefits come on top of the physical health benefits of walking and cycling that are already widely documented, they said.
Experts also found that travelling on public transport is better for people's psychological wellbeing than driving.
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"But as buses or trains also give people time to relax, read, socialise, and there is usually an associated walk to the bus stop or railway station, it appears to cheer people up," said Martin.
The research team studied 18 years of data on almost 18,000 18-65-year-old commuters in Britain.
The data allowed them to look at multiple aspects of psychological health including feelings of worthlessness, unhappiness, sleepless nights, and being unable to face problems.
The study also shows commute time to be important.
"Our study shows that the longer people spend commuting in cars, the worse their psychological wellbeing. And correspondingly, people feel better when they have a longer walk to work," Martin said.
The study was published in the journal Preventive Medicine.