This study was conducted to investigate the relationship between stress management and employee performance at Mutolere Hospital in Kisoro District, Uganda. The research was motivated by the observed challenges within the Ugandan public health sector, including systemic issues like understaffing and resource constraints, which are particularly acute in rural facilities like Mutolere Hospital. A mixed-methods case study design was employed, utilizing a sample of 60 employees selected through stratified and purposive sampling techniques from a target population of 151. Data was collected through structured questionnaires, interviews, and documentary review, and was analyzed both quantitatively and qualitatively. The results revealed that organizational factors were the primary causes of work-related stress. Role conflict was identified as the most significant stressor, reported by 50% of respondents, followed by a profound lack of motivation (75%) driven by irregular salary payments and inadequate resources. Role ambiguity was also a notable cause, cited by 33.3% of the staff. Regarding stress management, an overwhelming majority of respondents identified structured rest periods, shift work, and a pleasant physical work environment as the most effective strategies, with 91.7% and 93.3% endorsement, respectively. Furthermore, the findings confirmed that compensation was a critical factor; 66.7% of respondents indicated that reasonable pay motivated employee retention, while 48.3% stated that higher pay reduced financial anxiety and improved focus. The study concluded that employee performance at Mutolere Hospital was significantly hampered by preventable organizational stressors, primarily role conflict, demotivation due to poor remuneration, and an unsupportive work environment. Effective stress management was found to be directly linked to practical interventions related to work structure and environmental conditions. Based on these findings, the study recommends that the management of Mutolere Hospital, in collaboration with relevant government bodies, should: (1) immediately clarify job descriptions and workflows to eliminate role conflict and ambiguity; (2) implement and enforce structured shift systems with adequate time for rest to prevent burnout; (3) prioritize improvements to the physical work environment to make it more organized and pleasant; and (4) advocate for and ensure the timely disbursement of salaries and the provision of adequate operational resources to foster employee motivation and retention.