Background: Chronically ill patients often develop symptoms of depression. They run the risk of sliding into a downward spiral because of the interaction between depression and chronic illness. A minimal psychological intervention (MPI) has been developed to break through the spiral by applying principles of self-management and cognitive behavioral therapy. This study examines the effects of the MPI on self-efficacy, anxiety, daily functioning and social participation. Methods: A randomized controlled trial compared the MPI with usual care in 361 primary care patients. Nurses visited patients at home over a period of three months. Patients were aged 60 years and older, had minor depression or mild to moderate major depression and either type 2 diabetes mellitus (DM) or chronic obstructive pulmonary disease (COPD). Outcomes were measured at baseline and at one week, three months, and nine months after the intervention period. Results: At nine months after treatment, the MPI was associated with less anxiety (mean difference 2.5; 95% CI 0.7-4.2) and better self efficacy skills (mean difference 1.8; 95% CI 3.4-0.2), daily functioning (mean difference 1.7; 95% CI 0.6-2.7), and social participation (mean difference 1.3; 95% CI 0.4-2.2). Effect sizes for these outcomes were small to medium (0.29-0.40). Differences were primarily due to a stabilization of outcomes in the intervention group and deterioration in the control group. No major differences were observed between DM and COPD patients. Conclusions: The intervention appears to be reasonably effective in improving care for chronically ill elderly people. We recommend further evaluation of the MPI, including emphasis on detection and watchful waiting.