Major depressive disorder is often linked to stress. Although short-term stress is without effect in mice, prolonged stress leads to depressive-like behavior, indicating that an allostatic mechanism exists in this difference. Here we demonstrate that mice after short-term (1 h per day for 7 days) chronic restraint stress (CRS), do not display depressive-like behavior. Analysis of the hippocampus of these mice showed increased levels of neurotrophic factor-α1 (NF-α1; also known as carboxypeptidase E, CPE), concomitant with enhanced fibroblast growth factor 2 (FGF2) expression, and an increase in neurogenesis in the dentate gyrus. In contrast, after prolonged (6 h per day for 21 days) CRS, mice show decreased hippocampal NF-α1 and FGF2 levels and depressive-like responses. In NF-α1-knockout mice, hippocampal FGF2 levels and neurogenesis are reduced. These mice exhibit depressive-like behavior that is reversed by FGF2 administration. Indeed, studies in cultured hippocampal neurons reveal that NF-α1 treatment directly upregulates FGF2 expression through extracellular signal-regulated kinase-Sp1 signaling. Thus, during short-term CRS, hippocampal NF-α1 expression is upregulated and has a key role in preventing the onset of depressive-like behavior through enhanced FGF2-mediated neurogenesis. To evaluate the therapeutic potential of this pathway, we examined, rosiglitazone (Rosi), a PPARγ agonist, which has been shown to have antidepressant activity in rodents and humans. Rosi upregulates FGF2 expression in a NF-α1-dependent manner in hippocampal neurons. Mice fed Rosi show increased hippocampal NF-α1 levels and neurogenesis compared with controls, thereby indicating the antidepressant action of this drug. Development of drugs that activate the NF-α1/FGF2/neurogenesis pathway can offer a new approach to depression therapy.