ObjectiveIncome inequality has been linked to depressive disorders, but the pathways behind this impact are insufficiently understood. Hence, we aimed to investigate the impact of income inequality on depressive disorders and evaluate the extent to which this impact is mediated by trust. MethodsTwo waves (2012 and 2018) of the China Family Panel Studies (CFPS) were included. Depressive symptoms were assessed using the 8-item Center for Epidemiologic Studies Depression scale (CESD8) and income inequality was measured using the Gini index calculated with household income. Based on the counterfactual framework, causal mediation analysis was applied with the difference-in-difference (DID) method. The sequential ignorability assumption, an important assumption for mediation analysis, was examined by propensity score matching (PSM) and simulation-based sensitivity analysis. ResultsCompared to the control group (Change of Gini index ≤0), CESD8 scores in the treatment group (Change of Gini index >0) increase by 0.233 (95 % CI: 0.039, 0.430), which 10.1 % (95 % CI: 3.1 %, 46.0 %) was mediated by reductions in trusts at the provincial level. At the county level, income inequality influences depressive symptoms through the indirect path (β=0.008, 95%CI: 0.001, 0.020) instead of the direct path (β= − 0.146, 95%CI: −0.287, 0.000). Dividing the trust, the significant indirect effect appeared in the trust in neighbors, foreigners, government, and doctors at the provincial level. LimitationThis study didn't deal with the impact of post-treatment confounders of the mediator-outcome relationship. ConclusionsSevere income inequality directly and indirectly exacerbated depressive symptoms. Government should carry out the implementation of decreasing income inequality and improving trust.