People-centred mental healthcare is an influential concept for health system strengthening and sustainable development that has been developed and promoted primarily in Western contexts. It characterizes service users, families and communities as active participants in health system development. However, we have limited understanding of how well people-centred mental healthcare aligns with the multiplicity of peoples, cultures, languages and contexts in low- and middle-income countries (LMICs). Timor-Leste, a lower-middle income country in South-East Asia, is in the process of strengthening its National Mental Health Strategy 2018–22 to align with people-centred mental healthcare. To support the implementation of this Strategy, this study investigated the acceptability and feasibility of people-centred mental health services in Timor-Leste. In-depth semi-structured individual (n = 57) and group interviews (n = 15 groups) were conducted with 85 adults (≥18 years). Participants were service users, families, decision-makers, service providers and members of civil society and multilateral organizations across national and sub-national sites. Government and non-government mental health and social care was also observed. Framework analysis was used to analyse interview transcripts and observation notes. The study found that the ecology of mental healthcare in Timor-Leste is family-centred and that government mental health services are largely biomedically oriented. It identified the following major challenges for people-centred mental health services in Timor-Leste: different sociocultural perceptions of (in)dividual personhood, including a diminished status of people with mental illness; challenges in negotiating individual and family needs; a reliance on and demand for biomedical interventions; and barriers to health service access and availability. Opportunities for people-centred mental healthcare are better available within the social and disability sectors, which focus on social inclusion, human rights and peer support. Accounting for local cultural knowledge and understandings will strengthen design and implementation of people-centred mental healthcare in LMIC settings.