This article reviews the rapidly accumulating literature on the relationship between mood disorders and diabetes mellitus. Recent studies have demonstrated that depression and its associated symptoms constitute a major risk factor in the development of type 2 diabetes and may accelerate the onset of diabetes complications. Since the mid-1980s, multiple longitudinal and cross-sectional studies have scrutinized the association of diabetes with depressive symptoms and major depression. Utilizing the search terms depressive disorders, psychiatry, diabetes, and pathophysiology in MEDLINE searches (1966-2003), this article reviews studies investigating pathophysiological alterations related to glucose intolerance and diabetes in depressed patients. The few randomized, controlled studies of treatment of depression in patients with diabetes are also described. Short-term treatment of depression in patients with diabetes improves their dysphoria and other signs and symptoms of depression. Future research will confirm whether response to psychotherapy and/or psychopharmacologic treatment improves glucose control, encourages compliance with diabetes treatment, and perhaps even increases longevity.