OBJECTIVE: NSW has just experienced its worst drought in a century. As years passed with insufficient rain, drought-related mental health problems became evident on farms. Our objective is to describe how, in response, the Rural Adversity Mental Health Program was introduced in 2007 to raise awareness of drought-related mental health needs and help address these needs in rural and remote NSW. The program has since expanded to include other forms of rural adversity, including recent floods. SETTING: Rural NSW. DESIGN, PARTICIPANTS, INTERVENTIONS: Designed around community development principles, health, local service networks and partner agencies collaborated to promote mental health, education and early intervention. Strategies included raising mental health literacy, organising community social events and disseminating drought-related information. Priority areas were Aboriginal communities, older farmers, young people, women, primary health care and substance use. RESULTS: Over 3000 people received mental health literacy training in the four years of operation from 2007 to 2010. Stakeholders collaborated to conduct hundreds of mental health-related events attended by thousands of people. A free rural mental health support telephone line provided crisis help and referral to rural mental health-related services. CONCLUSION: Drought affected mental health in rural NSW. A community development model was accepted and considered effective in helping communities build capacity and resilience in the face of chronic drought-related hardship. Given the scale, complexity and significance of drought impacts and rural adjustment, and the threats posed by climate change, a long-term approach to funding such programs would be appropriate.