Background: Mental health remains among the top 10 leading causes of disease burden globally, and there is a significant treatment gap due to limited resources, stigma, limited accessibility, and low perceived need for treatment. Problem Management Plus, a World Health Organization-endorsed brief psychological intervention for mental health disorders, has been shown to be effective and cost-effectivein various countries globally but faces implementation challenges, such as quality control in training, supervision, and delivery. While digital technologies to foster mental health care have the potential to close treatment gaps and address the issues of quality control, their development requires context-specific, interdisciplinary, and participatory approaches to enhance impact and acceptance. Objective: We aimed to co-produce Technology-Assisted Problem Management Plus (TA-PM+) for "lady health workers" (LHWs; this is the terminology used by the Lady Health Worker Programme for lay health workers) to efficiently deliver sessions to women with symptoms of common mental health disorders within the community settings of Pakistan and conducted usability testing in community settings. Methods: A 3-stage framework was used for co-producing and prototyping the intervention. Stage 1 (evidence review and stakeholder consultation) included 3 focus group discussions with 32 LHWs and 7 in-depth interviews with key stakeholders working in the health system or at the health policy level. Thematic analyses using the Capability, Opportunity, and Motivation for Behavioral Change (COM-B) model were conducted. Stage 2 included over eight online workshops, and a multidisciplinary intervention development group co-produced TA-PM+. Stage 3 (prototyping) involved 2 usability testing rounds. In round 1 conducted in laboratory settings, 6 LHWs participated in role plays and completed the 15-item mHealth Usability App Questionnaire (MUAQ) (score range 0-7). In round 2 conducted in community settings, trained LHWs delivered the intervention to 6 participants screened for depression and anxiety. Data were collected using the MUAQ completed by LHWs and the Patient Satisfaction Questionnaire (PSQ) (score range 0-46) completed by participants. Results: Qualitative analysisindicatedthat alackofdigital skills among LHWs, high workload, resourcescarcity for digitization (specifically internet bandwidth in the community), and need for comprehensive training were barriers for TA-PM+implementation in the community through LHWs. Training, professional support, user guidance, an easy and automated interface, offline functionalities, incentives, and strong credibility among communities were perceived to enhance the capability, opportunity, and motivation of LHWs to implement TA-PM+. TA-PM+was co-produced with features like an automated interface, a personal dashboard, guidance videos, and a connected supervisory panel. The mean MUAQ score was 5.62 in round 1 of usability testing and improved to 5.96 after incorporating LHW feedback in round 2. The mean PSQ score for TA-PM+was 40 in round 2. Conclusions: Co-production of TA-PM+for LHWs balanced context and evidence. The 3-stage iterative development approach resulted in high usability and acceptability of TA-PM+for LHWs and participants.