Background: The present study assessed the impact of different types of breast surgery on rates of psychological disorders in breast cancer patients. Methods: This nationwide cohort study, based on Korean Health Insurance Review and Assessment Service claims data, included 26,259 breast patients who underwent surgery from June 1, 2017, to December 31, 2018. Associations between the incidence of psychological disorders and variables were evaluated by time dependent Cox regression analyses. Results: Of the 26,259 patients, 9394 (35.8%) underwent total mastectomy (TM) and 16,865 (64.2%) underwent partial mastectomy (PM); of the former, 4056 (43.2%) underwent breast reconstruction surgery (RS). A total of 4685 patients (17.84%) were newly diagnosed with psychological disorders after surgery. Multivariable analysis showed that axillary lymph node dissection was significantly associated with increased rates of overall psychological disorders (p < 0.0001), depression (p = 0.0462), anxiety (p < 0.0001) and insomnia (p < 0.0001). The rates of overall psychological disorders (p = 0.0002) and insomnia (p = 0.01) were significantly lower in patients who underwent TM than PM. RS tended to associated with reduced rates of overall psychological disorders in patients who underwent TM. Subgroup analysis showed that, compared with PM, RS after TM significantly associated with a reduced incidence of overall psychological disorders and insomnia in younger patients (< 50 years) and those who underwent sentinel lymph node biopsy. Conclusion: In contrast to general belief, rates of overall psychological disorders and insomnia were lower in patients who underwent TM than PM. Moreover, RS after TM confers psychological benefit in younger patients with early stage breast cancer compared with PM.