Yoga is increasingly used in clinical settings for a variety of mental and physical health issues, particularly stress-related illnesses and concerns, and has demonstrated promising efficacy. Yet the ways in which yoga reduces stress remain poorly understood. To examine the empirical evidence regarding the mechanisms through which yoga reduces stress, we conducted a systematic review of the literature, including any yoga intervention that measured stress as a primary dependent variable and tested a mechanism of the relationship with mediation. Our electronic database search yielded 926 abstracts, of which 71 were chosen for further inspection and 5 were selected for the final systematic review. These five studies examined three psychological mechanisms (positive affect, mindfulness and self-compassion) and four biological mechanisms (posterior hypothalamus, interleukin-6, C-reactive protein and cortisol). Positive affect, self-compassion, inhibition of the posterior hypothalamus and salivary cortisol were all shown to mediate the relationship between yoga and stress. It is striking that the literature describing potential mechanisms is growing rapidly, yet only seven mechanisms have been empirically examined; more research is necessary. Also, future research ought to include more rigorous methodology, including sufficient power, study randomisation and appropriate control groups.