Worldwide, the prevalence of depression in women is significantly greater than in men. Available data suggest that estrogen, or its absence, is strongly implicated in the regulation of mood and behaviour, as well as in the pathobiology of mood disorders. The multiple effects of estrogens and their complex interactions with the CNS and endocrine system have been well documented, although the specific, multifaceted role of estrogen in each dysphoric state has yet to be elucidated. Several facts suggest that estrogen plays a vital role in the precipitation and course of mood disorders in women. Gender differences in the prevalence of depression first appear after menarche, continue through reproductive age, and dissipate after perimenopause. Periods of hormonal fluctuations or estrogen instability (i.e. premenstrually, postpartum, perimenopausally) have been associated with increased vulnerability to depression among susceptible women. It is plausible that the phenotype of these depressions is distinguishable from those that are not associated with reproductive events or that occur in men. Based on current knowledge, estrogen treatment for affective disorders may be efficacious in two situations: (i) to stabilise and restore disrupted homeostasis - as occurs in premenstrual, postpartum or perimenopausal conditions; and (ii) to act as a psychomodulator during periods of decreased estrogen levels and increased vulnerability to dysphoric mood, as occurs in postmenopausal women. There is growing evidence suggesting that estrogen may be efficacious as a sole antidepressant for depressed perimenopausal women. It is still unclear whether estrogen is efficacious as an adjunct to selective serotonin reuptake inhibitors or as one of the paradigms to manage treatment-resistance depression in menopausal women, but such efficacy is plausible.