Interpersonal Psychotherapy (IPT) is an evidence-based treatment for adolescent depression. However, since it does not work for all adolescents in all settings, more research on its heterogeneous effects is needed. Using a realist approach, we aimed to generate hypotheses about mechanisms and contextual contingencies in adolescent group IPT in Nepal. We analysed 26 transcripts from qualitative interviews with IPT participants aged 13–19, facilitators, supervisors and trainers. We analysed data using the Framework Method. The qualitative analytical framework was based on the VICTORE checklist, a realist tool to explore intervention complexity. Sharing, problem-solving, giving and receiving support, managing emotions and negotiating emerged as mechanisms through which adolescents improved their depression. Participants perceived that girls and older adolescents benefitted most from IPT. Girls had less family support than boys and therefore benefitted most from the group support. Older adolescents found it easier than younger ones to share problems and manage emotions. Adolescents exposed to violence and parental alcoholism struggled to overcome problems without family and school support. We formulated hypotheses on group IPT mechanisms and contextual interpersonal and school-level factors. Research is needed to test these hypotheses to better understand for whom IPT works and in what circumstances.