In the challenge–hindrance literature it is assumed that challenge stressors elicit motivational processes. However, it is currently unclear if challenge stressors really foster employees’ motivation and, if so, which types of motivation would be promoted. Building on self-determination and expectancy-value theory, we examined different motivation types and self-efficacy in within-person processes that link challenge stressors with employees’ well-being and growth. We assumed that challenge stressors potential to promote motivation is contingent on employees’ self-efficacy and that, while some motivation types positively impact employees’ vitality and learning, others may also show adverse effects. To test the hypothesized within-person processes, we conducted a diary study. A sample of 118 office workers responded to three daily surveys (during the morning, during the afternoon, and at the end of the workday) for up to ten workdays resulting in 727 observations. We found that daily challenge stressors are related to social and material external regulation and that their relationships with social external, introjected, and identified regulation, as well as intrinsic motivation are moderated by day-level self-efficacy. Overall, the mechanisms underlying the motivational processes of challenge stressors are rather complex. To unleash the motivational potential of challenge stressors, organizations should create conditions that boost self-efficacy.