Background Most displaced people with mental disorders in low- and middle-income countries do not receive effective care, and their access to care has deteriorated during the Coronavirus Disease 2019 (COVID-19) pandemic. Digital mental health interventions are scalable when digital access is adequate, and they can be safely delivered during the COVID-19 pandemic. We examined whether a new WHO-guided digital mental health intervention, Step-by-Step, in which participants were supported by a nonspecialist helper, was effective in reducing depression among displaced people in Lebanon. Methods and findings We conducted a single-blind, 2-arm pragmatic randomized clinical trial, comparing guided Step-by-Step with enhanced care as usual (ECAU) among displaced Syrians suffering from depression and impaired functioning in Lebanon. Primary outcomes were depression (Patient Health Questionnaire, PHQ-9) and impaired functioning (WHO Disability Assessment Schedule-12, WHODAS) at posttreatment. Secondary outcomes included subjective well-being, anxiety, post-traumatic stress, and self-described problems. A total of 569 displaced people from Syria with depression (PHQ-9 ≥ 10) and impaired functioning (WHODAS > 16) were randomized to Step-by-Step (N = 283; lost to follow-up: N = 167) or ECAU (N = 286; lost to follow-up: 133). Participants were considered to be lost to follow-up when they did not fill in the outcome measures at posttest or follow-up. Recruitment started on December 9, 2019 and was completed on July 9, 2020. The last follow-up assessments were collected in December 2020. The study team had access to the online platform, where they could see treatment arm assignment for each participant. All questionnaires were completed by participants online. Intention-to-treat (ITT) analyses showed intervention effects on depression (standardized mean differences [SMDs]: 0.48; 95% CI: 0.26; 0.70; p < 0.001), impaired functioning (SMD: 0.35; 95% CI: 0.14; 0.56; p < 0.001), post-traumatic stress (SMD: 0.36; 95% CI: 0.16; 0.56; p < 0.001), anxiety (SMD: 0.46; 95% CI: 0.24; 0.68; p < 0.001), subjective well-being (SMD: 0.47; 95% CI: 0.26; 0.68; p < 0.001), and self-identified personal problems (SMD: 0.49; 95% CI 0.28; 0.70; p < 0.001). Significant effects on all outcomes were maintained at 3 months follow-up. During the trial, one serious adverse event occurred, unrelated to the intervention. The main limitation of the current trial is the high dropout rate. Conclusions In this study, we found that a guided, digital intervention was effective in reducing depression in displaced people in Lebanon. The guided WHO Step-by-Step intervention we examined should be made available to communities of displaced people that have digital access. Trial registration ClinicalTrials.gov NCT03720769.