Forty-one elderly medical inpatients with active major depression were matched with nondepressed controls from the same population. Survival and health care utilization were examined during a mean follow-up period of five months. Cases and controls were matched by age, functional status, severity and type of medical illness, and extent of disease. In-hospital mortality was significantly higher among depressed compared with nondepressed controls (6 vs 0 deaths, P = .03). For patients discharged from the hospital alive, however, depression did not have a substantial impact on mortality (31.4% cases, 31.7% controls). Health care utilization--in terms of days of inpatient care--was significantly higher both during the index admission (25 vs 14 days, P less than .005) and during the follow-up period (16 vs 7 days, P less than .05) for depressed patients compared with controls. Hence, older medically ill patients with major depression consume more healthcare resources and experience greater mortality during their initial hospital stay. After discharge, while survival is little affected, excess resource utilization persists among those with depression.