Dysfunction in the motivation to expend effort for reward is considered a crucial symptom of stress-related mental illness. Few studies have explored the relationship between chronic stress and the motivation to exert effort for reward, along with its underlying neural mechanisms. We investigated this relationship in ninety undergraduates who were undergoing a chronic stressor: preparing for the National Postgraduate Entrance Examination (NPEE). Students engaged in an effort-reward task while EEG signals were recorded, wherein they could accept or reject an offer to expend effort for another opportunity to obtain the reward. Participants’ chronic stress levels were assessed using the Perceived Stress Scale (PSS) and their decision was further captured by a drift-diffusion model (DDM). Compared to reward omission, reward delivery led to increased amplitude of the reward positivity (RewP) ERP waveform, particularly in extra reward trials relative to regular trials. Importantly, the PSS score showed an inverted U-shaped relationship with the motivation indicators, including offer acceptance rate (behavioral index), drift rate (model parameter), and ΔRewP (i.e., the difference in RewP in response to reward delivery compared to reward omission, ERP component). These findings suggest an inverted U-shaped relationship between chronic stress and motivation, suggesting that individuals display diminished motivation when exposed to low or high levels, relative to moderate levels, of chronic stress. Our study holds significant implications for understanding both vulnerability and resilience to stress-related mental disorders.