Background Communication between nurse managers and nurses is important for mental health of hospital nurses. Objective The aim of the present study was to investigate the relationship between managers’ communication behaviors toward nurses, and work engagement and psychological distress among hospital nurses using a multilevel model. Design The present study was a cross-sectional questionnaire survey. Settings The participants were nurses working at three hospitals in Japan. Participants A total of 906 nurses from 38 units participated in the present study. The units with small staff sizes and participants with missing entries in the questionnaire were excluded. The data for 789 nurses from 36 questionnaire survey units were analyzed. Method A survey using a self-administered questionnaire was conducted. The questionnaire asked staff nurses about communication behaviors of their immediate manager and their own levels of work engagement, psychological distress, and other covariates. Three types of manager communication behaviors (i.e., direction-giving, empathetic, and meaning-making language) were assessed using the Motivating Language scale; and the scores of the respondents were averaged for each unit to calculate unit-level scores. Work engagement and psychological distress were measured using the Utrecht Work Engagement Scale and the K6 scale, respectively. The association of communication behaviors by unit-level managers with work engagement and psychological distress among nurses was analyzed using two-level hierarchical linear modeling. Results The unit-level scores for all three of the manager communication behaviors were significantly and positively associated with work engagement among nurses (p < 0.05). This association was smaller and non-significant after adjusting for the psychosocial work environment. The individual levels of all three of the manager communication behaviors were also significantly and positively associated with work engagement (p < 0.05). None of the three manager communication behaviors was significantly associated with psychological distress (p > 0.05). Conclusion Motivating language by unit-level managers might be positively associated with work engagement among hospital nurses, which is mediated through the better psychosocial work environment of the unit.