From a transactional developmental perspective, the authors review findings from studies of animals and humans regarding a proposed relation between stress system abnormalities and major depression. The stress system has evolved to promote successful adaptation across the life span, but disruptions in its functioning may increase the risk of pathological outcomes. Emphasis is placed on the role of prenatal and early postnatal experience in contributing to individual differences in postnatal stress reactivity, which may interact with cognitive and psychosocial vulnerabilities to increase susceptibility to later onset of depression. Findings regarding cognitive, psychosocial, and medical sequelae of depression are also reviewed, with a focus on the possible mediating role of the stress system. The authors highlight the importance of multidisciplinary, longitudinal studies in attempting to gain a deeper understanding of the complex developmental processes involved in the onset and course of depression.