A fervent debate exists among researchers and social critics about whether smartphone use strengthens or undermines community participation and social relationships. This study investigates the dynamics between smartphone use and psychological well-being among university students over a one-year period, employing a two-wave longitudinal analysis to examine this relationship across various mobile applications. Our findings reveal that the direction and magnitude of the interplay depend on the specific purposes of smartphone engagement. Specifically, there is a bidirectional relationship between smartphone use (either overall use or specific mobile application use) and psychological well-being: higher levels of perceived social support and loneliness reduce subsequent smartphone use, while increased smartphone use boosts perceived social support and heightens loneliness. The impact of life satisfaction on different mobile applications varies: life satisfaction negatively affects the subsequent use of social media, mobile gaming, and mobile health applications, while its effects on mobile shopping and overall smartphone use are insignificant. Additionally, increased overall smartphone use decreases life satisfaction, whereas increased use of mobile shopping and mobile health applications significantly improves life satisfaction, but the others—social media and mobile gaming—do not. These findings hold noteworthy implications for research and practices.