BACKGROUND: Depression is common and is associated with poor outcomes among elderly care-home residents. Exercise is a promising low-risk intervention for depression in this population. We tested the hypothesis that a moderate intensity exercise programme would reduce the burden of depressive symptoms in residents of care homes. METHODS: We did a cluster-randomised controlled trial in care homes in two regions in England; northeast London, and Coventry and Warwickshire. Residents aged 65 years or older were eligible for inclusion. A statistician independent of the study randomised each home (1 to 1·5 ratio, stratified by location, minimised by type of home provider [local authority, voluntary, private and care home, private and nursing home] and size of home [<32 or ≥32 residents]) into intervention and control groups. The intervention package included depression awareness training for care-home staff, 45 min physiotherapist-led group exercise sessions for residents (delivered twice weekly), and a whole home component designed to encourage more physical activity in daily life. The control consisted of only the depression awareness training. Researchers collecting follow-up data from individual participants and the participants themselves were inevitably aware of home randomisation because of the physiotherapists' activities within the home. A researcher masked to study allocation coded NHS routine data. The primary outcome was number of depressive symptoms on the geriatric depression scale-15 (GDS-15). Follow-up was for 12 months. This trial is registered with ISRCTN Register, number ISRCTN43769277. FINDINGS: Care homes were randomised between Dec 15, 2008, and April 9, 2010. At randomisation, 891 individuals in 78 care homes (35 intervention, 43 control) had provided baseline data. We delivered 3191 group exercise sessions attended on average by five study participants and five non-study residents. Of residents with a GDS-15 score, 374 of 765 (49%) were depressed at baseline; 484 of 765 (63%) provided 12 month follow-up scores. Overall the GDS-15 score was 0·13 (95% CI -0·33 to 0·60) points higher (worse) at 12 months for the intervention group compared with the control group. Among residents depressed at baseline, GDS-15 score was 0·22 (95% CI -0·52 to 0·95) points higher at 6 months in the intervention group than in the control group. In an end of study cross-sectional analysis, including 132 additional residents joining after randomisation, the odds of being depressed were 0·76 (95% CI 0·53 to 1·09) for the intervention group compared with the control group. INTERPRETATION: This moderately intense exercise programme did not reduce depressive symptoms in residents of care homes. In this frail population, alternative strategies to manage psychological symptoms are required. FUNDING: National Institute for Health Research Health Technology Assessment.