Currently available therapeutic interventions for treatment-resistant depression, including switch, combination, and augmentation strategies, are less than ideal. Observations of mood elevation during vagus nerve stimulation (VNS) therapy for pharmacoresistant epilepsy suggested a role for VNS therapy in refractory major depression and prompted clinical investigation of this neurostimulation modality. The VNS Therapy System has been available for treatment of pharmacoresistant epilepsy since 1997 and was approved by the US Food and Drug Administration for treatment-resistant depression in July, 2005. The physiology of the vagus nerve, mechanics of the VNS Therapy System, and efficacy and safety in pharmacoresistant epilepsy are reviewed. Promising results of VNS therapy for treatment-resistant depression have been forthcoming from both acute and long-term studies, evidenced in part by progressive improvements in depression rating scale scores during the 1st year of treatment with maintenance of response thereafter. VNS therapy is well tolerated in patients with either pharmacoresistant epilepsy or treatment-resistant depression. As in epilepsy, the mechanisms of VNS therapy of treatment-resistant depression are incompletely understood. However, evidence from neuroimaging and other studies suggests that VNS therapy acts via innervation of the nucleus tractus solitarius, with secondary projections to limbic and cortical structures that are involved in mood regulation, including brainstem regions that contain serotonergic (raphe nucleus) and noradrenergic (locus ceruleus) perikarya that project to the forebrain. Mechanisms that mediate the beneficial effects of VNS therapy for treatment-resistant depression remain obscure. Suggestions for future research directions are described.