Abstract Background The burden of unhealthy lifestyle behaviours and mental disorders disproportionately affects children in deprived neighbourhoods. In Canada, school practices addressing diversity, equity and inclusion (DEI) are promoted to address such inequities. We aimed to assess whether DEI school practices can help mitigate the impact of neighbourhood deprivation on children’s lifestyle behaviours and mental health. Methods In 2023 we gathered survey data from 1497 grade 4-6 children (aged 9-12) in 22 elementary schools located in deprived neighbourhoods in Alberta, Canada. Children reported their diet, screen time, physical activity, and mental health. Principals reported on the implementation of DEI practices in schools (full vs. partial). School postal codes were used to derive tertiles of the Canadian Index of Multiple Deprivation, comprised of four dimensions that capture: 1) residential instability; 2) economic dependency; 3) ethno-cultural composition and 4) situational vulnerability of neighbourhoods. Results Overall, 45% of schools had fully implemented DEI practices. These schools were located in more deprived neighbourhoods for residential instability (55%), economic dependency (71%), ethno-cultural composition (60%), and situational vulnerability (64%). Children in more deprived neighbourhoods reported more sugar consumption, more screen time, and poorer mental health, compared to children in less deprived neighbourhoods. However, in those neighbourhoods where DEI practices were fully implemented, the adverse effects of neighbourhood deprivation were alleviated, whereby children reported less sugar consumption, less screen time, and better mental health. Conclusions The implementation of DEI school practices can help mitigate the adverse effects of neighbourhood deprivation on children’s physical and mental health, particularly in deprived neighbourhoods. Key messages • School practices targeting diversity, equity, and inclusion are more commonly implemented in schools located in deprived neighbourhoods. • Diversity, equity, and inclusion school practices mitigate the adverse effects of neighbourhood deprivation on children’s lifestyle behaviours and mental health.