This study aims to explain the role of urban environmental quality in perceived environmental stress and citizens’ psychological restoration through a comparative analysis of two neighborhoods in Tehran, namely Yousefabad and Javadieh. The main research question addresses how spatial and environmental differences across urban neighborhoods shape residents’ experiences of psychological stress and their capacity for mental restoration. The research is applied in purpose and adopts a descriptive–analytical survey method. Data were collected using a researcher developed questionnaire consisting of three sections: demographic characteristics, urban environmental quality, and perceived environmental stress and psychological restoration. The statistical population included residents of the two selected neighborhoods. The collected data were analyzed using several statistical techniques, including the Kolmogorov–Smirnov test, independent samples t test, Pearson correlation analysis, and multiple regression analysis. The findings indicate significant differences between the two neighborhoods in various dimensions of urban environmental quality, perceived environmental stress, and psychological restoration. Yousefabad demonstrated more favorable conditions in physical, sensory, and natural environmental dimensions and correspondingly exhibited lower levels of environmental stress and higher levels of psychological restoration among residents. In contrast, Javadieh, characterized by lower environmental quality, particularly in natural and sensory aspects, showed higher stress levels and reduced restorative capacity. Furthermore, the results of correlation and regression analyses reveal that environmental quality, especially its natural and sensory components, plays a significant role in explaining environmental stress and psychological restoration. Overall, the findings suggest that urban environmental quality should be regarded as a crucial factor influencing citizens’ mental well being.