Previous research has shown individuals living with type 2 diabetes are more likely to experience depression, anxiety and reduced quality of life (QoL) in comparison to those without the disease. Physical activity has been highlighted as an important factor in improving physiological and psychological parameters in this population. Previous systematic reviews have found mixed results regarding the effects of exercise on psychological problems. Green exercise is an emerging research area with mounting evidence demonstrating positive effects on mental health. Objectives of the current review investigated whether conducting physical activity in outdoor environments had any effect on psychological problems in individuals with type 2 diabetes. Methods such as PubMed, Medline, PsycINFO, Scopus, Cochrane library, CINAHL, SPORTDiscus and Google Scholar databases were searched. The databases were searched for articles which used an outdoor exercise intervention and investigated psychological problems in individuals with type 2 diabetes. Results from the 1467 retrieved articles, 4 studies were included in the systematic review, consisting of 231 participants. All four studies investigated QoL, one study looked at depression and one investigated general wellbeing. Mixed results were found regarding QoL, no significant effect was found for depression. However, general wellbeing was improved. Due to the limited number of studies eligible for inclusion and the heterogeneity of outcome measures, it was difficult to draw firm conclusions. This systematic review acts as a starting point for future investigations into the use of green exercise in improving the mental health of individuals living with type 2 diabetes. Registration: PROSPERO: CRD42018088212.