Evidence from prospective and cross-sectional studies demonstrates that the presence of diabetes doubles the risk of comorbid depression. This commonly overlooked comorbidity affects more than one quarter of the diabetic population, making its recognition and treatment in diabetic patients clinically relevant. PubMed, PsycINFO, and MEDLINE databases were searched (search words: diabetes, depression, metabolic control, hyperglycemia, hypoglycemia) for articles that evaluated outcomes, relationships, and/or management of comorbid depression and diabetes published between 1980 and 2002. This review represents a synthesis of the findings including treatment recommendations. Concurrent depression is associated with a decrease in metabolic control, poor adherence to medication and diet regimens, a reduction in quality of life, and an increase in health care expenditures. In turn, poor metabolic control may exacerbate depression and diminish response to antidepressant regimens. Psychotherapy and pharmacotherapy are effective in the presence of diabetes; both cognitive behavior therapy and selective serotonin reuptake inhibitors are weight neutral and have been associated with glycemic improvement in some studies. Depression is common in both type 1 and type 2 diabetes and has significant effects on the course and outcome of this medical illness. Conventional antidepressant management strategies are effective and the regimen should be tailored to the individual patient. Enhanced efforts toward good glycemic control may also contribute to improvements in mood and perceptions of well-being.