BACKGROUND: Longitudinal data are lacking on mental health trajectories following conflict resolution and return migration. COMRAID-R is a follow-up study of Muslims displaced by conflict from Northern Sri Lanka 20 years ago who are now beginning to return. METHODS: Of 450 participants in displacement interviewed in 2011, 338 (75.1%) were re-interviewed a year later, and a supplementary random sample (n = 228) was drawn from return migrants with a comparable displacement history. Common mental disorder (CMD; Patient Health Questionnaire) and post-traumatic stress disorder (CIDI-subscale) were measured. RESULTS: A CMD prevalence of 18.8% (95%CI 15.2-22.5) at baseline had reduced to 8.6% (5.6-11.7) at follow-up in those remaining in displacement, and was 10.3% (6.5-14.1) in return migrants. PTSD prevalences were 2.4%, 0.3% and 1.6% respectively. CONCLUSIONS: We observed a substantial decrease in CMD prevalence in this population over a short period, which may reflect the prospect of return migration and associated optimism following conflict resolution.