Epilepsy is a complex disorder that is commonly associated with brain dysfunction, social isolation, and vocational difficulty. Each of these factors may contribute to the increased prevalence of psychiatric illness in epilepsy, but emerging evidence is providing a more complete and clearer elucidation of the problem. Clinical investigations have consistently demonstrated that depression has a large impact on subjective health status. In patients with recurrent seizures, depression appears to have a stronger association with quality of life than does the seizure rate. In fact, depression is second only to medication toxicity as the clinical factor that explains the greatest variance in quality of life. Only a small number of studies have investigated the plausible neurobiological mechanisms of depression in epilepsy, but preliminary data suggest that underlying brain dysfunction may be a more important predictor than vocational or social disability. Furthermore, specific aspects of hippocampal dysfunction may be a causal factor in the genesis and maintenance of depression in temporal lobe epilepsy. Current treatment recommendations for depression in epilepsy are similar to those for otherwise neurologically normal depressed patients, emphasizing the role of serotonin reuptake inhibitors, but certain antidepressants should be used with caution. Ongoing studies are attempting to define optimal treatment strategies, and more definitive data to guide clinical management are expected to become available in the near future.