Mangrove forests possess multiple functions for the environment and society through their valuable ecosystem services. Along with this, the mangrove forests have large and diverse social values, in combination contributing to the health and wellbeing of the surrounding communities. This study aims (i) to assess the benefits of mangrove forests and their impact on subjective and psychological wellbeing of coastal communities and (ii) to understand the challenges coastal communities face that limit sustainable wellbeing. We have used a mixed methodological approach, combining workshop, interview, and survey, to obtain qualitative and quantitative information from two coastal communities in Malaysia and Indonesia. For quantitative data, 67 participants from both coastal communities participated using a pre-tested structured questionnaire. To obtain opinions from key informants in Malaysia and Indonesia, we organized two stakeholders' workshops and community interviews. When merging these interviews and workshops, we identified the following three themes related to the perception of mangrove forest benefits: (1) the advantage of living in a natural countryside; (2) the natural resources supporting employment, income, and family security; and (3) the increase in subjective and psychological wellbeing. The mean score of wellbeing for Indonesian participants (28.6) was slightly higher than that for Malaysian participants (26.2) and was significant. Overall, the respondents felt happy because the combination of job security and leisure activities supports feeling content and satisfied. The analyses also suggest that the combination of exposure to coastal environments and stress reduction promotes good mental health; however, diagnostic health data are lacking. The lower score of mental wellbeing in Malaysia is attributed to respondents involved in risky fishing activities and local regions with excessive tourism. The findings from this study imply that coastal mangrove forest management plays an important role in the living conditions of coastal communities and their subjective and psychological wellbeing. Hence, restoration and sustainability of mangrove ecosystem are important.