Reduced hippocampal volume has been reported in depression and may be involved in the aetiology of depressive symptoms and vulnerability to depressive relapse. Neuroplasticity following antidepressant drug treatment in the hippocampus has been demonstrated in animal models but adaptive changes after such treatment have not been shown in humans. In this study, we determined whether grey matter loss in the hippocampus in depression (1) is present in medication-free depressed (2) changes in response to antidepressant treatment and (3) is present as a stable trait in medication-free remitted patients. Sixty-four medication-free unipolar depressed patients: 39 currently depressed and 25 in remission, and 66 healthy controls (HC) underwent structural magnetic resonance imaging in a cross-sectional and longitudinal design. Thirty-two currently depressed participants were then treated with the antidepressant citalopram for 8 weeks. Adherence to treatment was evaluated by measuring plasma citalopram concentration. We measured regional variation in grey matter concentration by using voxel-based morphometry-Diffeomorphic Anatomical Registration Through Exponentiated Lie algebra. Patients with current depression had bilaterally reduced grey matter in the hippocampus compared with HC and untreated patients in stable remission with the latter groups not differing. An increase in grey matter was observed in the hippocampus following treatment with citalopram in currently depressed patients. Grey matter reduction in the hippocampus appears specific to the depressed state and is a potential biomarker for a depressive episode.