Background: The co-occurrence of depression among individuals with type 2 diabetes is a recognised global health problem and can lead to poorer health outcomes for both conditions. Behavioural activation is an evidence-based brief, low-cost psychological therapy which can be delivered by trained non-specialists, and is useful in treating depression, particularly in low-resource settings. The aim of this study is to test the effectiveness and cost-effectiveness of culturally adapted behavioural activation for depression in people with both depression and type 2 diabetes in two South Asian countries - Bangladesh and Pakistan. Methods: A parallel arm, multi-country randomised controlled trial will be conducted in urban health care facilities providing diabetes services. We will recruit 604 adults in total, and randomise them using a 1:1 allocation ratio to receive culturally adapted behavioural activation (DiaDeM), or optimised usual care. DiaDeM comprises six sessions of behavioural activation with a trained non-mental health facilitator, conducted face-to-face and/or remotely. Optimised usual care includes information on depression, pharmacological and non-pharmacological treatment options for depression and details for accessing help locally. Participants in both arms will be followed up at 6- and 12-months post-randomisation. The primary outcome is the severity of depressive symptoms at 6 months, measured using the 9-item Patient Health Questionnaire (PHQ-9). Secondary outcomes include diabetes control, measured using glycosylated haemoglobin. An embedded process evaluation will evaluate the quality of intervention delivery and explore mechanisms of change and the contextual factors associated with the implementation and observed outcomes of DiaDeM. An economic evaluation will gauge DiaDeM’s cost-effectiveness and estimate the impact of diabetes and depression on economic outcomes. Conclusion: There is an urgent need to address the rising burden of depression and chronic physical illnesses, such as type 2 diabetes. Interventions such as DiaDeM, which are culturally relevant and rely on a task-sharing approach, offer a potentially low-cost treatment within existing health services. If found to be effective and cost-effective, DiaDeM may be scaled up to address the mental health ‘treatment gap’ and improve mental and physical health outcomes for people with diabetes in South Asia.