This mediation in restorative justice focuses on positive transformation of commercial criminal conflict resolution with communication, empathy, and psychological understanding as a way for resolution. This research examines mediation as a means of allowing offenders, victims, and the community to proceed in emotional terms and in accepting responsibility without punitive punishment. Restorative mediation provides the psychological basis for internal reflection, moral education, and empathy-the acknowledgment by the offender of the human consequence of his action, while putting the victim into a position to speak about his own hurt and reclaim his power. This paper aims to analyze the psychological underpinnings that facilitate mediative processes-successful listening, emotional regulation, and cognitive refraining. An application of such is discussed in terms of behavioral change and conflict resolution in the criminal justice system in improving procedural fairness and reducing recidivism in later reintegration into society. Other topics addressed relate to particular psychological challenges that mediators experience in their work with issues like trauma, power imbalances, and resistance to reconciliation. This paper opens a holistic approach, where understanding these values in light of psychological insight could make mediation an entire healing process rather than one just for punitive justice. Research indicates that restorative mediation might be a clear indication for modern criminal justice reform-not as an instrument to use in repairing society but rather as a societal context with a special nurturing environment for the healing of psychological well-being across the participants involved.