To investigate the mechanism(s) of action of mindfulness based stress reduction (MBSR(BC)) including reductions in fear of recurrence and other potential mediators. Eighty-two post-treatment breast cancer survivors (stages 0–III) were randomly assigned to a 6-week MBSR(BC) program (n = 40) or to usual care group (UC) (n = 42). Psychological and physical variables were assessed as potential mediators at baseline and at 6 weeks. MBSR(BC) compared to UC experienced favorable changes for five potential mediators: (1) change in fear of recurrence problems mediated the effect of MBSR(BC) on 6-week change in perceived stress (z = 2.12, p = 0.03) and state anxiety (z = 2.03, p = 0.04); and (2) change in physical functioning mediated the effect of MBSR(BC) on 6-week change in perceived stress (z = 2.27, p = 0.02) and trait anxiety (z = 1.98, p = 0.05). MBSR(BC) reduces fear of recurrence and improves physical functioning which reduces perceived stress and anxiety. Findings support the beneficial effects of MBSR(BC) and provide insight into the possible cognitive mechanism of action.