Summary Background Unprecedented levels of habitat transformation and rapid urbanisation are changing the way individuals interrelate with the natural environment in developing countries with high economic disparities. Although the potential benefit of green environments for mental health has been recognised, population-level evidence to this effect is scarce. We investigated the effect of green living environment in potentially countering incident depression in a nationally representative survey in South Africa. Methods We used panel data from the South African National Income Dynamics Study (SA-NIDS). Our study used SA-NIDS data from three waves: wave 1 (2008), wave 2 (2010), and wave 3 (2012). Households were sampled on the basis of a stratified two-stage cluster design. In the first stage, 400 primary sampling units were selected for inclusion. In the second stage, two clusters of 12 dwelling units each were drawn from within each primary sampling unit (or 24 dwelling units per unit). Household and individual adult questionnaires were administered to participants. The main outcome, incident depression (ie, incident cohort of 11 156 study participants without significant depression symptoms at their first entry into SA-NIDS), was assessed in the adult survey via a ten item version of the Center for Epidemiologic Studies Depression Scale; a total score of ten or higher was used as a cutoff to indicate significant depressive symptoms. Each participant was assigned a value for green living space via a satellite-derived normalised difference vegetation index (NDVI) based on the GPS coordinates of their household location. Findings Overall, we found uneven benefit of NDVI on incident depression among our study participants. Although the green living environment showed limited benefit across the study population as a whole, our final analysis based on logistic regression models showed that higher NDVI was a predictor of lower incident depression among middle-income compared with low-income participants (adjusted odds ratio [aOR] 0·98, 0·97–0·99, p<0·0001), although when this analysis was broken down by race, its positive effect was particularly evident amongst African individuals. Living in rural areas was linked to lower odds of incident depression (aOR 0·71, 0·55–0·92, p=0·011) compared with study participants residing in urban informal areas that often lack formal planning. Interpretation Our results imply the importance of green environments for mental wellbeing in sub-Saharan African settings experiencing rapid urbanisation, economic and epidemiological transition, reaffirming the need to incorporate environmental services and benefits for sustainable socioeconomic development. Funding South African Medical Research Council, National Institutes of Health, and Academy of Finland.