Background: Depressive symptoms are common in people with type 2 diabetes and contribute to adverse health consequences that substantially impact social and vocational function. Despite the existence of effective depression treatments, the majority of people with type 2 diabetes do not access these when needed. Web-based alternatives to more traditional psychotherapies offer a potential solution to reducing the personal and economic burdens of type 2 diabetes. Objective: This paper outlines the protocol for a randomized controlled trial (RCT) of myCompass, a Web-based public health psychotherapy intervention, in people with type 2 diabetes. Fully automated, interactive, and delivered via the Internet without clinician support, myCompass teaches cognitive behavioral therapy-based skills and supports symptom monitoring to improve daily functioning and reduce mild-to-moderate mental health symptoms. Methods: A two-arm RCT will be conducted. People with type 2 diabetes and mild-to-moderately severe depressive symptoms will be recruited from the community and general practice settings. Screening and enrollment is via an open-access website. Participants will be randomized to use either myCompass or an active placebo program for 8 weeks, followed by a 4-week tailing-off period. The placebo program is matched to myCompass on mode of delivery, interactivity, and duration. Outcomes will be assessed at baseline and at 3-month, 6-month, and 12-month follow-up. The primary study outcome is work and social functioning. Secondary study outcomes include depressive and anxious symptoms, diabetes-related distress, self-care behaviors, and glycemic control. Results: Nationwide recruitment is currently underway with the aim of recruiting 600 people with type 2 diabetes. Recruitment will continue until October 2017. Conclusions: This is the first known trial of a Web-based psychotherapy program that is not diabetes specific for improving social and vocational function in people with type 2 diabetes and mild-to-moderately severe depressive symptoms. With the increasing prevalence of type 2 diabetes and depression, a potentially scalable public health intervention could play a very large role in reducing unmet mental health need and ameliorating the personal and societal impact of illness comorbidity.