Using a randomized, placebo-controlled design, this study assessed the effects of estrogen alone (ES) or in combination with cyclic progesterone (EP) on daily ratings of mood and physical symptoms before and after 6 months of daily hormone treatment. Fifty-four postmenopausal women were recruited from the community at large and specifically selected as being asymptomatic at the time of enrollment and without significant psychiatric history. Ratings were obtained every day for 30 days prior to treatment and again every day during the last 30 days of treatment. Results revealed that when compared with pretreatment levels, women randomized to EP (n = 16) exhibited statistically significant increases in daily depression, cramping, and breast tenderness and a marginally significant increase in daily anxiety. However, these increases were mild, not clinically significant, and did not interfere with normal functioning. Women randomized to ES (n = 20) showed no significant change in daily mood measures, although they did experience an increase in breast tenderness with estrogen. A significant placebo (n = 18) effect was observed, as there was a reliable reduction in daily irritability ratings (p < 0.05) with placebo. These findings suggest that for most postmenopausal women, the use of hormones will not be associated with clinically significant changes in mood or physical symptoms, which weighs favorably into the cost-benefit ratio for women considering hormone replacement therapy.