Improving Vaccine Literacy (VAC-HL) is a promise strategy to reduce vaccine hesitancy (VH). VAC-HL refers to the individual ability to access, understand, critically appraise, and apply vaccination-related information to make informed decisions about vaccinations for themselves or for others to be vaccinated. This study explores the pathways through which VAC-HL impacts VH. The analysis was based on data from seven countries of the WHO European Region which implemented the Health Literacy Survey 2019–2021 (HLS19). VH was measured by a proxy for self-reported vaccination behaviour of respondents or their family members (e.g., children) over the past five years, while VAC-HL was assessed using four items stemming from the 47-item health literacy questionnaire used in HLS19 (HLS19-Q47). A multilevel structural equation model was applied to examine the mediation role of vaccination attitudes - confidence, complacency, conspiracy beliefs - in the relationship between VAC-HL and VH, controlling for socio-economic confounding factors. The results showed that individuals with high levels of VAC-HL are less likely to be unvaccinated (OR = 0.67, 95 % CI = 0.64–0.70). The inclusion of mediation variables in the model reduced slightly the association but it remained statistically significant (OR = 0.82, 95 % CI = 0.80–0.83). About 27.10 % of the association between VAC-HL and VH was mediated by confidence, 6.58 % by complacency and 17.30 % by conspiracy. Enhancing VAC-HL might have a positive effect on restoring confidence in vaccination and reducing complacency and conspiracy beliefs, which are essential for improving vaccination uptake. © 2025 The Author(s)