Globally, the poor are consistently at greater risk of suffering from depression and anxiety. Yet in resource-poor countries, mental health remains a neglected topic. This interdisciplinary study explored the potential for a poverty alleviation programme to contribute to breaking the vicious cycle between poverty and common mental disorders (CMD). Quantitatively, beneficiaries of a cash-transfer programme were found to have a lower risk of CMD. Qualitative interviews indicated that Child Support Grants acted as a psychological safety net, but that negative stereotypes of grant recipients could detract from the positive mental health outcomes of the grants. It was concluded that poverty alleviation programmes such as cash transfers could have both positive and negative impacts on mental health. In order to achieve mental health benefits for programme beneficiaries, aspects of programme design and implementation that promote mental health should be enhanced and aspects detrimental to mental health modified.