Although cash transfer programmes are not explicitly designed to improve mental health, by reducing poverty and improving the life chances of children and young people, they may also improve their mental health. This systematic review and meta-analysis assessed the evidence on the effectiveness of cash transfers to improve the mental health of children and young people in low-income and middle-income countries. We searched Pubmed, EBSCOhost, Scientific Electronic Library Online, ISI Web of Science and Social Sciences Citation Index and grey literature (from January 2000 to July 2020) for studies which quantitatively assessed the impact of cash transfers on mental health in young people (aged 0–24 years), using a design that incorporated a control group. We extracted Cohen’s d effects size and used a random-effects model for the meta-analysis on studies that measured depressive symptoms, I2 statistic and assessment of study quality. Cash transfers may have positive effects on some mental health outcomes for young people, with no negative effects identified. However, there is high heterogeneity across studies, with some interventions showing no effects. Our review highlights how the effect of cash transfers may vary by social and economic context, culture, design, conditionality and mental health outcome.