Challenge stressors are those stressful job demands that potentially evoke job strains but at the same time heighten work motivation (LePine, Podsakoff, & LePine, 2005). According to the transactional theory of stress (Lazarus & Folkman, 1984), stress reactions hinge upon employee stress appraisals. However, few studies have linked stress appraisals to both the motivation and strain effects of challenge stressors. To address this theoretical gap, the current study used the experience sampling method (ESM) to investigate how stress appraisals mediate the motivational and strain effect of challenge stressors at the daily level. Using hierarchical linear modeling, the current study found the positive relationships of daily challenge stressors with daily task focus, daily work meaningfulness, and daily psychological strains. Daily challenge appraisals mediated the relationships of daily challenge stressors with daily task focus and daily work meaningfulness, while daily hindrance appraisals mediated the relationships of daily challenge stressors with daily psychological strains. Further, promotion focus strengthened the daily challenge stressor-daily stress appraisal relationship and prevention focus exacerbated the daily challenge stressor-daily hindrance appraisal relationship. Finally, the interaction of daily challenge appraisals and daily hindrance appraisals was significant in predicting daily task focus and daily psychological strains. The current study ripens the understanding of stress appraisals in employee reactions to challenge stressors as well as the implications of employee regulatory focus on stress appraisal process.