Mobile health (mHealth) apps offer unique opportunities to support self-care and behavior change, but poor user engagement limits their effectiveness. This is particularly true for fully automated mHealth apps without any human support. Human support in mHealth apps is associated with better engagement but at the cost of reduced scalability. This work aimed to (1) describe the theory-informed development of a fully automated relaxation and mindfulness app to reduce distress in people with cancer (CanRelax app 2.0), (2) describe engagement with the app on multiple levels within a fully automated randomized controlled trial over 10 weeks, and (3) examine whether engagement was related to user characteristics. The CanRelax app 2.0 was developed in iterative processes involving input from people with cancer and relevant experts. The app includes evidence-based relaxation exercises, personalized weekly coaching sessions with a rule-based conversational agent, 39 self-enactable behavior change techniques, a self-monitoring dashboard with gamification elements, highly tailored reminder notifications, an educational video clip, and personalized in-app letters. For the larger study, German-speaking adults diagnosed with cancer within the last 5 years were recruited via the web in Switzerland, Austria, and Germany. Engagement was analyzed in a sample of 100 study participants with multiple measures on a micro level (completed coaching sessions, relaxation exercises practiced with the app, and feedback on the app) and a macro level (relaxation exercises practiced without the app and self-efficacy toward self-set weekly relaxation goals). In week 10, a total of 62% (62/100) of the participants were actively using the CanRelax app 2.0. No associations were identified between engagement and level of distress at baseline, sex assigned at birth, educational attainment, or age. At the micro level, 71.88% (3520/4897) of all relaxation exercises and 714 coaching sessions were completed in the app, and all participants who provided feedback (52/100, 52%) expressed positive app experiences. At the macro level, 28.12% (1377/4897) of relaxation exercises were completed without the app, and participants' self-efficacy remained stable at a high level. At the same time, participants raised their weekly relaxation goals, which indicates a potential relative increase in self-efficacy. The CanRelax app 2.0 achieved promising engagement even though it provided no human support. Fully automated social components might have compensated for the lack of human involvement and should be investigated further. More than one-quarter (1377/4897, 28.12%) of all relaxation exercises were practiced without the app, highlighting the importance of assessing engagement on multiple levels.