Background The PRogramme for Improving Mental Health carE (PRIME) evaluated the process and outcomes of the implementation of a mental healthcare plan (MHCP) in Chitwan, Nepal. Aims To describe the process of implementation, the barriers and facilitating factors, and to evaluate the process indicators of the MHCP. Method A case study design that combined qualitative and quantitative methods based on a programme theory of change (ToC) was used and included: (a) district-, community- and health-facility profiles; (b) monthly implementation logs; (c) pre- and post-training evaluation; (d) out-patient clinical data and (e) qualitative interviews with patients and caregivers. Results The MHCP was able to achieve most of the indicators outlined by the ToC. Of the total 32 indicators, 21 (66%) were fully achieved, 10 (31%) partially achieved and 1 (3%) were not achieved at all. The proportion of primary care patients that received mental health services increased by 1200% over the 3-year implementation period. Major barriers included frequent transfer of trained health workers, lack of confidential space for consultation, no mental health supervision in the existing system, and stigma. Involvement of Ministry of Health, procurement of new psychotropic medicines through PRIME, motivation of health workers and the development of a new supervision system were key facilitating factors. Conclusions Effective implementation of mental health services in primary care settings require interventions to increase demand for services and to ensure there is clinical supervision for health workers, private rooms for consultations, a separate cadre of psychosocial workers and a regular supply of psychotropic medicines.