BACKGROUND: Very low-carbohydrate (LC) diets are often used to promote weight loss, but the long-term effects on psychological function remain unknown. METHODS: A total of 106 overweight and obese participants (mean [SE] age, 50.0 [0.8] years; mean [SE] body mass index [calculated as weight in kilograms divided by height in meters squared], 33.7 [0.4]) were randomly assigned either to an energy-restricted (approximately 1433-1672 kcal [to convert to kilojoules, multiply by 4.186]), planned isocaloric, very low-carbohydrate, high-fat (LC) diet or to a high-carbohydrate, low-fat (LF) diet for 1 year. Changes in body weight, psychological mood and well-being (Profile of Mood States, Beck Depression Inventory, and Spielberger State Anxiety Inventory scores), and cognitive functioning (working memory and speed of processing) were assessed. RESULTS: By 1 year, the overall mean (SE) weight loss was 13.7 (1.8) kg, with no significant difference between groups (P = .26). Over the course of the study, there were significant time x diet interactions for Spielberger State Anxiety Inventory, Beck Depression Inventory, and Profile of Mood States scores for total mood disturbance, anger-hostility, confusion-bewilderment, and depression-dejection (P < .05) as a result of greater improvements in these psychological mood states for the LF diet compared with the LC diet. Working memory improved by 1 year (P < .001 for time), but speed of processing remained largely unchanged, with no effect of diet composition on either cognitive domain. CONCLUSIONS: Over 1 year, there was a favorable effect of an energy-restricted LF diet compared with an isocaloric LC diet on mood state and affect in overweight and obese individuals. Both diets had similar effects on working memory and speed of processing. Trial Registration anzctr.org.au Identifier: 12606000203550.