Common mental disorders among young people are rising globally. Current university-based interventions are inadequate to address the need for evidence-based interventions. We investigated the effectiveness and implementation of Step-by-Step (SbS), a WHO digital intervention to address depression, among Chinese university students with depressive symptoms. In this paper, we report a type 1 hybrid effectiveness-implementation randomized controlled trial conducted between September 2021 and September 2022. The control condition was enhanced treatment as usual (ETAU, psychoeducation). The primary outcome was improvement in depression symptoms. Secondary outcomes were improvements in psychological well-being, anxiety symptoms, and self-identified psychosocial problems. Effectiveness of the intervention was evaluated using generalized linear mixed models. Implementation outcomes were evaluated by thematic analysis of participant interviews. A total of 371 participants were enrolled to two treatment conditions in a 1:1 ratio. SbS resulted in a greater reduction in depressive symptoms at posttreatment (p = 0.004, Hedges’ g = 0.35), but no significant difference between SbS and ETAU was observed at three-month follow-up (p = 0.179, Hedges’ g = 0.16). The treatment effect was larger among those who adhered to the treatment (Hedges’ gs = 0.59 and 0.30). Subjective well-being also improved for SbS at both time points (Hedges’ gs = 0.31 and 0.30). In addition, SbS resulted in more improvement in anxiety symptoms at posttreatment (p = 0.029, Hedges’ g = 0.26), but not at three-month follow-up (p = 0.265, Hedges’ g = 0.13). The qualitative results demonstrated that the intervention was well-implemented as a self-help mental health service, with minimal support from peer supporters. In conclusion, Step-by-Step, a digital intervention developed by WHO, was effective in reducing depressive symptoms in the short term and improving psychological well-being in a longer term. The sustained effect on depression needs further investigation. Improving uptake and engagement in the program is needed for its scale-up implementation as a university-based mental health service for Chinese young adults. Trial registration: ChiCTR2100050214.