Objectives Precarious employment (PE) is a term used to describe non-standard employment forms characterized by low security that may have negative effects on mental health. The objective of this review was to systematically review the evidence for effects of PE on mental health and identify important areas for further research. Methods A protocol was developed following PRISMA-P guidelines. Web of Science, PubMed and PsycINFO were searched up to 4 September 2017. All unique records were assessed for eligibility and quality by at least two reviewers. Data from included studies were summarized in forest plots and meta-analyses using a random-effects model. Evidence quality was rated using the GRADE method. Results We obtained 3328 unique records, of which 16 studies of sufficient quality met the inclusion criteria. Moderate quality evidence (GRADE score 3 of 4) was found for an adverse effect of job insecurity on mental health; summary odds ratio (OR) 1.52 [95% confidence interval (CI) 1.35-1.70]. There was very low quality (GRADE 1 of 4) evidence for effects of temporary employment or unpredictable work hours on mental health. Five studies on multidimensional exposures all showed adverse effects, weighted average OR 2.01 (95% CI 1.60-2.53). Conclusions Research on PE and mental health is growing, but high-quality prospective studies are still scarce. Job insecurity likely has an adverse effect on mental health. A clear multi-dimensional definition of PE is lacking, and harmonization efforts are needed. Further single-variable observational studies on job insecurity or temporary employment should not be prioritized.