BackgroundWith the prolongation of the life expectancy of the Chinese population and the intensification of the aging process of the population, the mental health problems of the elderly have become increasingly prominent. This study aims to explore whether self-employment can promote and how to promote the mental health of the elderly.MethodBased on the 2018 China Longitudinal Aging Social Survey (CLASS) data, this paper uses OLS model and KHB method to verify the impact of self-employment on the mental health of the younger elderly and its mechanism.ResultsThe results indicate that self-employment can significantly reduce the depression tendency of the younger elderly and promote their mental health. Heterogeneity analysis shows that self-employment has a more significant positive impact on the mental health of the younger elderly who are self-rated healthy, free of chronic diseases and low-level medical service utilization. The mechanism shows that self-employment can indirectly improve the mental health of the younger elderly through income growth effect and self-worth realization effect, in which the self-worth realization effect is greater than the economic effect. It illustrates that with the development of China’s economy, the elderly are pursuing more intrinsic values brought by self-employment than economic benefits.ConclusionIn view of the above research results, it is suggested to encourage the elderly to actively participate in social activities, provide policy support for the younger elderly to engage in self-employment, increase government support as well as health guarantee level, and improve the subjective initiative of the elderly to participate in self-employment, so that the society can truly realize the healthy aging of “being useful and productive for the elderly”.