Longitudinal research on the relationship between job demands and job performance and its underlying mechanisms is scarce. The aims of this longitudinal three‐wave study among 920 Finnish employees were to ascertain whether (1) challenge job demands (i.e., workload, cognitive demands) and self‐reported job performance are positively related over time, (2) job insecurity (i.e., a hindrance demand) and job performance are negatively related over time, (3) restorative experiences during off‐job time and sleep quality are underlying mechanisms in these relations, and (4) affective rumination mediates the proposed relations of job demands and job insecurity with restoration and sleep quality. Self‐report data were analysed with structural equation modelling. The results revealed a positive, temporal relationship between challenge job demands and job performance (task and contextual performance) across 1 year, but no temporal relationship between job insecurity and self‐reported job performance. Moreover, high challenge job demands were positively related to the restorative value of off‐job activities, and favourable restoration was positively related to subsequent task performance. Finally, affective rumination mediated the relationship of challenge job demands with both restoration and sleep quality. Job insecurity was not longitudinally related to restoration, sleep quality, or affective rumination. The implications of our findings for occupational health psychology are discussed. Practitioner points: Provide employees with sufficient job resources (e.g., high autonomy and social support) to adequately deal with high job demands.Allow employees sufficient time to recover from high job demands during off‐job time and provide training sessions in recovery, relaxation, meditation, and goal setting.Employees may attempt to counteract perseverative thoughts by actively pursuing distracting restoration activities (e.g., exercise, meditation). [ABSTRACT FROM AUTHOR]