Background: Integration of mental health services into primary health care systems has been advocated as a strategy to minimize the tremendous mental health treatment gap, particularly in low- and middle-income countries. Barriers to integration of mental health into primary health care have been widely documented; however, very little is known about the perception of service users and their caregivers on primary care-based mental health services. This study assessed service users' and caregivers' perceptions of mental health services provided by trained primary health care workers in Nepal. Methods: A qualitative study was conducted among people with depression, psychosis, alcohol use disorder and epilepsy, and their caregivers in Chitwan, a district in southern Nepal. Semi-structured interviews were conducted with 43 service users and 38 caregivers to assess their perceptions about the accessibility of the services, types of services they received, skills and competencies of health care providers, satisfaction and barriers to receiving services. Results: Overall, both service users and caregivers were satisfied with the mental health services provided by primary health care providers. They also perceived health workers to be competent and skillful because the services they received were effective in reducing their mental health problems. Both psychological and pharmacological services were made available free of cost, however, they considered psychological services more effective than pharmacological treatment. Major challenges and difficulties accessing services were associated with frequent transfer of trained health workers, non-availability of the same health care provider at follow-ups, frequent stock-out of medicines or non-availability of required medicines, lack of a confidential space for consultation in health facilities, and stigmatizing and negative behavior of some health workers. Conclusion: The results demonstrated that both service users and caregivers perceived primary care-based mental health services to be accessible, acceptable and effective. The key recommendations emerging from this study for improving mental health services in primary care include the provision of a separate cadre of psychosocial workers to provide psychological interventions, developing quick and efficient mechanisms for the procurement and supply of psychotropic medicines, establishing a confidential place within health facilities for consultation, and further training of health workers to reduce stigma.