Background: Mental Health Literacy (MHL) among healthcare providers is a key factor for early diagnosis and effective intervention in psychiatric illnesses. Nurses’ preparedness, influenced by MHL, plays a critical role in shaping attitudes and practices toward mental health. Objectives: This study aimed to assess the level of MHL among nursing students and examine the associations between knowledge, attitude, behavior, and sociodemographic factors. Methods: A descriptive cross-sectional study was conducted among 114 nursing students (MSc, PBBSc, PB Diploma, and recent graduates) of a selected College of Nursing. Data were collected using a structured questionnaire and a standardized 35-item Mental Health Literacy Scale (O’Connor & Casey³). Descriptive and inferential statistics were applied. Results: The majority (78.1%) of participants had a fair level of MHL, while 16.7% had good and 0.9% had poor MHL. Good knowledge (60.5%) and positive attitude (97.3%) were observed, but only 26.3% had good behavioral/practice scores. MHL was significantly associated with professional qualification (p = 0.004) but not with age, experience, or workshop attendance. Conclusion: While nursing students demonstrated good knowledge and attitude towards mental illness, their practices did not align, indicating the need for targeted skill-building interventions. Integrating practical mental health training into curricula may bridge this gap.