BackgroundResearch suggests that rates of mental illness are similar in rural and urban Australia, although there are significant workforce shortages in rural regions along with higher rates of chronic disease and obesity and lower levels of socioeconomic status. However, there are variations across rural Australia and limited local data on mental health prevalence, risk, service use and protective factors. This study describes the prevalence of self-reported mental health problems of psychological distress and depression, in a rural region in Australia and aims to identify the factors associated with these problems.MethodsThe Crossroads II study was a large-scale cross-sectional study undertaken in the Goulburn Valley region of Victoria, Australia in 2016–18. Data were collected from randomly selected households across four rural and regional towns and then screening clinics from individuals from these households. The main outcome measures were self-reported mental health problems of psychological distress assessed by the Kessler 10 and depression assessed by Patient Health Questionnaire-9. Unadjusted odd ratios and 95% confidence intervals of factors associated with the two mental health problems were calculated using simple logistic regression with multiple logistic regression using hierarchical modelling to adjust for the potential confounders.ResultsOf the 741 adult participants (55.6% females), 67.4% were aged ≥ 55 years. Based on the questionnaires, 16.2% and 13.6% had threshold-level psychological distress and depression, respectively. Of those with threshold-level K-10 scores, 19.0% and 10.5% had seen a psychologist or a psychiatrist respectively while 24.2% and 9.5% of those experiencing depression had seen a psychologist or a psychiatrist, respectively in the past year. Factors such as being unmarried, current smoker, obesity, were significantly associated with a higher prevalence of mental health problems whereas physical activity, and community participation reduced the risk of mental health problems. Compared to rural towns, the regional town had higher risk of depression which was non-significant after adjusting for community participation and health conditions.ConclusionsThe high prevalence of psychological distress and depression in this rural population was consistent with other rural studies. Personal and lifestyle factors were more relevant to mental health problems than degree of rurality in Victoria. Targeted lifestyle interventions could assist in reducing mental illness risk and preventing further distress.Supplementary InformationThe online version contains supplementary material available at 10.1186/s12888-023-04931-5.