Sixty-eight depressed patients were subdivided according to their family's level of family functioning into functional and dysfunctional groups. Patients from dysfunctional families did not differ from those from functional families on measures of severity of depression, chronicity of depression, depression subtypes, other nonaffective psychiatric diagnoses, history of depression, or neuroendocrine functioning. Patients from dysfunctional families did have significantly higher levels of neuroticism. A 12-month follow-up of these patients indicated that depressed patients with dysfunctional families had a significantly poorer course of illness, as manifested by higher levels of depression, lower levels of overall adjustment, and a lower proportion of recovered patients. Thus, impaired family functioning appears to be an important prognostic factor in major depression.