This study investigated the influence of a community health worker (CHW) diabetes lifestyle intervention on mental health outcomes. Our study was guided by the principles of community-based participatory research. Data were collected from 164 African American (N = 94) and Hispanic adults (N = 70) participating in a randomized, 6-month delayed intervention group design for improving glycemic control. The intervention time periods were baseline to 6 months for the treatment group and 6–12 months for the delayed group. Linear mixed models were used to conduct longitudinal analyses of the Problem Areas in Diabetes (PAID) and Patient Health Questionnaire (PHQ) scales. In the model adjusted for demographics, the PAID dropped significantly from pre-intervention to post-intervention within both the treatment and delayed groups (p < 0.05) with an average intervention effect of −6.4 (p < 0.01). The PAID dropped even further within the immediate group from 6 to 12 months. Although the PHQ did not change significantly, the PHQ-2 had an average intervention effect of −0.3 (p < 0.05) in the model adjusted for demographics. This study contributes to an understanding of how a CHW-led diabetes intervention can result in positive mental health outcomes for Latinos and African Americans with Type 2 diabetes. It also highlights the importance of further exploring what factors may contribute to racial/ethnic variation in mental health outcomes for African Americans and Latinos with diabetes and the role CHWs can play.