Context: Given the public health significance of late-life depression and anxiety, and the limited capacity of treatment, there is an urgent need to develop effective strategies to prevent these disorders. Objective: To determine the effectiveness of an indicated stepped-care prevention program for depression and anxiety disorders in the elderly. Design: Randomized controlled trial with recruitment between October 1, 2004, and October 1, 2005. Setting: Thirty-three primary care practices in the northwestern part of the Netherlands. Participants: A total of 170 consenting individuals, 75 years and older, with subthreshold symptom levels of depression or anxiety who did not meet the full diagnostic criteria for the disorders. Intervention: Participants were randomly assigned to a preventive stepped-care program (n = 86) or to usual care (n = 84). Stepped-care participants sequentially received a watchful waiting approach, cognitive behavior therapy-based bibliotherapy, cognitive behavior therapy-based problem-solving treatment, and referral to primary care for medication, if required. Main Outcome Measures: The cumulative incidence of DSM-IV major depressive disorder or anxiety disorder after 12 months as measured using the Mini International Neuropsychiatric Interview. Results: The intervention halved the 12-month incidence of depressive and anxiety disorders, from 0.24 (20 of 84) in the usual care group to 0.12 (10 of 86) in the stepped-care group (relative risk, 0.49; 95% confidence interval, 0.24 to 0.98). Conclusions: Indicated stepped-care prevention of depression and anxiety in elderly individuals is effective in reducing the risk of onset of these disorders and is valuable as seen from the public health perspective.