Cash transfers (CTs) are increasingly recognized as a scalable intervention to alleviate financial hardship. A large body of evidence evaluates the impact of CTs on subjective well-being (SWB) and mental health (MH) in low- and middle-income countries. We undertook a systematic review, quality appraisal and meta-analysis of 45 studies examining the impact of CTs on self-reported SWB and MH outcomes, covering a sample of 116,999 individuals. After an average follow-up time of two years, we find that CTs have a small but statistically significant positive effect on both SWB (Cohen’s d = 0.13, 95% confidence interval (CI) 0.09, 0.18) and MH (d = 0.07, 95% CI 0.05, 0.09) among recipients. CT value, both relative to previous income and in absolute terms, is a strong predictor of the effect size. Based on this review and the large body of existing research demonstrating a positive impact of CTs on other outcomes (for example, health and income), there is evidence to suggest that CTs improve lives. To enable comparisons of the relative efficacy of CTs to improve MH and SWB, future research should meta-analyse the effects of alternative interventions in similar contexts.