<p>This study investigated the intricate dynamic relationships between work engagement, mental health, and work performance among employees. Given the potential reciprocal influence between work engagement and mental health, their reciprocal effects were firstly examined in Study 1 using a cross-lagged panel model with a three-wave longitudinal design among 369 Chinese employees. Subsequently, in Study 2, the mediating role of mental health in the relationship between work engagement and work performance was explored utilizing a 1-1-1 multilevel structural equation model within a 15-day diary study involving 62 Chinese employees. Findings of Study 1 revealed consistent positive effects of work engagement on subsequent mental health and findings of Study 2 demonstrated that work engagement acted as an antecedent of both mental health and work performance at both within-person and between-person levels. Notably, mental health was found mediating the impact of work engagement on work performance at the within-person level. In terms of future research and interventions on enhancing work performance, our study findings underscored the importance of fostering work engagement and mental health to enhance employee work performance.</p>