Objectives: To determine the effectiveness of collaborative care in reducing depression in primary care patients with diabetes or heart disease using practice nurses as case managers. Design: A two-arm open randomised cluster trial with wait-list control for 6 months. The intervention was followed over 12 months. Setting: Eleven Australian general practices, five randomly allocated to the intervention and six to the control. Participants: 400 primary care patients (206 intervention, 194 control) with depression and type 2 diabetes, coronary heart disease or both. Intervention: The practice nurse acted as a case manager identifying depression, reviewing pathology results, lifestyle risk factors and patient goals and priorities. Usual care continued in the controls. Main outcome measure: A five-point reduction in depression scores for patients with moderate-to-severe depression. Secondary outcome was improvements in physiological measures. Results: Mean depression scores after 6 months of intervention for patients with moderate-to-severe depression decreased by 5.7±1.3 compared with 4.3±1.2 in control, a significant (p=0.012) difference. (The plus-minus is the 95% confidence range.) Intervention practices demonstrated adherence to treatment guidelines and intensification of treatment for depression, where exercise increased by 19%, referrals to exercise programmes by 16%, referrals to mental health workers (MHWs) by 7% and visits to MHWs by 17%. Control-practice exercise did not change, whereas referrals to exercise programmes dropped by 5% and visits to MHWs by 3%. Only referrals to MHW increased by 12%. Intervention improvements were sustained over 12 months, with a significant (p=0.015) decrease in 10-year cardiovascular disease risk from 27.4±3.4% to 24.8±3.8%. A review of patients indicated that the study's safety protocols were followed. Conclusions: TrueBlue participants showed significantly improved depression and treatment intensification, sustained over 12 months of intervention and reduced 10-year cardiovascular disease risk. Collaborative care using practice nurses appears to be an effective primary care intervention.