Online game addiction and psychological distress are two continuously developing problems in the Philippines, with Filipinos aged 18 to 24 being the second largest age group to overuse interactive online-related games. This sequential explanatory mixed method study aimed to assess the young adults’ gaming addiction and perceived psychological distress during the COVID-19 pandemic and identify the other factors contributing to the respondents’ frequent engagement in online interactive games, which served as a basis for a preventive intervention program. The researcher administered the survey questionnaires of the Gaming Addiction Scale and Depression Anxiety Stress Scale-21 to 399 young adults aged 18–24 and a semi-structured interview guide to 20 addicted and non-addicted gamers. Key results showed that a small percentage of the respondents experienced polythetic and serious monothetic addiction to interactive online games. In contrast, half of the respondents manifested mild to moderate symptoms of depression and anxiety during the COVID-19 pandemic. Major findings also found no significant gender differences in the level of online game addiction and psychological distress during the COVID-19 pandemic, and a moderate level of relationship substantiated the association. Further results revealed that the negative compensatory factors were associated with addicted gamers’ frequent engagement with online games, whereas non-addicted gamers were associated with positive, beneficial factors. This phenomenon has hardly ever been the focus of in-depth research, and the results of this study can be used to further refine the conceptualization of “internet gaming disorder” as a mental disorder and develop a more comprehensive treatment method.