The present study evaluated the effects of depression and a family history of alcohol or substance dependence on P300 event-related potentials in young women aged 14 to 20 years. Of the 130 female subjects, 29 met DSM-III-R diagnostic criteria for a lifetime history of a Major Depressive Episode. Event-related electroencephalographic potentials were recorded from each subject while she performed a complex visual oddball task. Analyses indicated a decrement in P300 amplitude in the depressed group as compared to girls with no history of depression. No effects of family history of alcoholism or drug dependence were detected. Current source density analyses, utilizing a realistic head-shape boundary element model, indicated that the difference between the depressed and non-depressed groups was maximal in the right prefrontal region. These results provide further support for the notion that the cognitive difficulties associated with depression are subtle and best detected with sensitive neurophysiological indices, such as P300.