The aims of this study were, first, to estimate the prevalence of depressive disorders in Australian nursing home residents using international diagnostic criteria, and second, to explore environmental determinants of such disorders. Residents of 24 nursing homes were surveyed using the Canberra Interview for the Elderly (CIE) and a range of environmental measures was also taken. Of 323 residents who were screened for cognitive impairment, 165 (51%) scored 18 or above on the Mini-Mental State Examination (Folstein et al. 1975), and were interviewed with the CIE. According to DSM-III-R criteria and the CIE, the prevalence of major depressive episode was 9.7%. Using ICD-10 criteria, 6.1% of residents suffered from a severe depressive episode, 6.7% from a moderate depressive episode and 6.7% from a mild depressive episode. Some measures of the social environment were significantly related to depressive symptoms.