Although driver distraction can be considered as part of everyday driving it constitutes a basic contributory factor for increased risk for road accidents internationally. Within this content, cell-phone use and conversation with passenger are two critical invehicle distraction conditions with respect to driver behavior and safety. The objective of this research is the investigation of the effect of area and traffic conditions on driving performance of drivers while talking on the mobile phone or conversing with the passenger. For this purpose, a large driving simulator experiment is carried out, in which 95 drivers from all different age groups (young, middle aged and older) were asked to drive under different types of distraction (no distraction, conversation with passenger, cell phone use) in rural and urban road environment, in low and high traffic. In the next step, an appropriate modelling methodology has been developed, including first descriptive analysis in order to explore the large database. Then generalized linear models as well as generalized linear mixed models regarding average speed and reaction time were implemented in order to estimate the effect of the examined distraction sources as well as area and traffic characteristics on driving behaviour and road safety. Results indicate that female drivers, especially in rural areas, were found to have the worst reaction times, while being distracted (either conversing with a passenger or talking on the cell phone). This is probably explained by the fact that in urban area, the complex road environment alerts the drivers in order to self-regulate their driving to compensate for any decrease in attention to the driving task. Furthermore, regarding average speed, it is observed that in rural areas drivers reduce the speed while distracted either by talking on the mobile phone (older drivers) or by conversing with the passenger (young and middle aged drivers), especially at high traffic volume while in urban areas suggesting a driver’s compensatory behaviour. The next steps of the present research could focus on the investigation of the impact of mobile phone use, not only when the drivers talk on mobile phone using a hand-held device, but also when they use a hands-free device, a Bluetooth, or when they type messages.