This longitudinal study examines the physical health consequences of depression among 3107 older persons (55-85 years). Major depression was defined according to DSM-III criteria in a psychiatric interview. Minor depression was defined by a Center for Epidemiologic Studies Depression score > or = 16. Health consequences were assessed by 3-year change in self-reported functional status, 3-year change in performance on objective tests, and risk of death over 4.5 years. At baseline, 12.8% of the older persons had minor depression and 2.0% major depression. Minor depression was associated with a significantly greater decline in functional status and performance and, only in men but not in women, with an increased risk of death. Major depression also increases decline in functional status and the risk of death (irrespective of sex), but was not associated with decline in physical performance. These results show that late-life depression has strong unfavorable physical health consequences. The consequences of minor depression are comparable with those of major depression.