Introduction: Dignity Therapy (DT) is a brief, individualized, narrative psychotherapy developed to reduce psychosocial and existential distress, and promote dignity, meaning, and hope in end of life patients. Previous studies have shown that DT was effective in reducing anxiety and depression, and improving dignity-related distress. However, less is known about its efficacy on spiritual well-being. The aim of this study is to contribute to the existing literature by investigating the effects of DT on specific dimensions of spiritual well-being, demoralization and dignity-related distress in a sample of terminally ill patients.Methods: A randomized, controlled trial was conducted with 64 terminally ill patients who were randomly assigned to the intervention group (DT + standard palliative care) or the control group (standard palliative care alone). The primary outcome measures were Meaning, Peace, and Faith whereas the secondary outcome measures were (loss of) Meaning and purpose, Distress and coping ability, Existential distress, Psychological distress, and Physical distress. All measures were assessed at baseline (before the intervention), 7–10 and 15–20 days after the baseline assessment. The trial was registered with ClinicalTrials.gov (Protocol Record NCT04256239).Results: The MANOVA yielded a significant effect for the Group X Time interaction. ANOVA with repeated measures showed a significant effect of time on peace and a significant Group X Time interaction effect on peace. Post hoc comparisons revealed that, while there was a decrease in peace from pre-treatment to follow-up and from post-treatment to follow-up in the control group, there was no such trend in the intervention group.Discussion: This study provides initial evidence that patients in the DT intervention maintained similar levels of peace from pre-test to follow-up, whereas patients in the control group showed a decrease in peace during the same time period. We did not find significant longitudinal changes in measures of meaning, faith, loss of meaning and purpose, distress and coping ability, existential, psychological and physical distress. The findings of our study are of relevance in palliative care and suggest the potential clinical utility of DT, since they offer evidence for the importance of this intervention in maintaining peace of mind for terminally ill patients.