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Patient activation enhances self-management of chronic illnesses, and sleep quality is vital for health. The link between activation and sleep quality and the mediating role of chronic diseases remain underexplored. This study examined the association between patient activation and sleep quality, variations across chronic disease groups, and whether chronic diseases mediate this relationship. A population-based cross-sectional survey in South Tyrol (Italy) included 2090 adults (55.0% response rate). Patient activation was measured using the Patient Activation Measure (PAM-10), and sleep quality was measured using the Brief Pittsburgh Sleep Quality Index (B-PSQI). The presence and number of chronic diseases were self-reported. Bivariate analyses, multiple linear regression, and mediation analyses (PROCESS) were performed. Among the participants, 918 (44%) reported at least one chronic disease. These individuals had poorer sleep (B-PSQI mean: 5.05 ± 3.26 vs. 3.66 ± 2.65; <i>p</i> < 0.001) and lower patient activation (PAM-10: 54.4 ± 12.7 vs. 57.2 ± 12.5; <i>p</i> < 0.001) than those without. A negative correlation between PAM-10 and B-PSQI was observed (r = -0.12, <i>p</i> < 0.001), with stronger associations in patients with hypertension and mental illness. In adjusted regressions, chronic disease, female sex, and older age predicted poorer sleep, whereas higher PAM-10 scores predicted better sleep. Mediation analyses showed that chronic disease partially mediated the relationship between patient activation and sleep quality, accounting for 4.7% to 6.3% of the total effect. Conclusions: Higher patient activation correlates with better sleep quality, although this relationship is partly mediated by the chronic disease burden. Sleep disturbances persist across chronic conditions, despite good self-management. These findings highlight the importance of adopting strategies to manage chronic diseases and sleep disturbances, acknowledging that while patient activation is statistically associated with sleep quality, the strength of this relationship is limited.