The lack of access to safe water and adequate sanitation pose significant health challenges for many individuals and communities in low and middle-income countries. Aside from direct health issues, the lack of access to safe water and adequate sanitation is increasingly associated with psychosocial concerns that affect the wellbeing of individuals and communities. However, the nature of these concerns has received little attention in peer-reviewed literature. This paper draws on environmental stress and ecosocial theories to explore psychosocial concerns related to water and sanitation in Usoma, a lakeshore community in Western Kenya. The study used qualitative key informant interviews (n = 9) and focus group discussions (n = 10). Results reveal deep feelings of anxiety and frustration, embarrassment, negative identity, feelings of marginalization, and lack of self-efficacy. These stressors were a byproduct of daily lived experiences associated with lack of access to safe water and adequate sanitation, as well as the coping strategies people adopted. The paper suggests that benefits of water interventions transcend disease reduction to improved wellbeing through complex social pathways. The findings contribute to knowledge gaps within the water–health nexus and direct policy responses toward largely unexplored psychosocial concerns associated with water and sanitation.