For now more than 50 years, lithium has been the gold standard for the pharmacologic treatment of bipolar disorder. However, its utility is not restricted to acute mania and prophylactic treatment of bipolar disorder. A relatively new indication for its use is the addition to an antidepressant in the acute treatment phase of unipolar major depression. To date, this treatment approach called lithium augmentation is the best-documented approach in the treatment of refractory depression. In international treatment guidelines and algorithms, lithium augmentation is considered a first-line treatment strategy for patients with a major depressive episode who do not adequately respond to standard antidepressant treatment. In a recent double-blind, placebo-controlled trial, lithium augmentation has demonstrated to also be effective in the continuation treatment phase to prevent early relapses. From animal studies there is robust evidence that lithium augmentation increases serotonin (5-HT) neurotransmission, possibly by a synergistic action of lithium and the antidepressant on brain 5-HT pathways. In contrast to the established decline of HPA system activity during treatment with tricyclic antidepressants, neuroendocrine studies on the effects of lithium augmentation on the HPA system showed an unexpected and marked increase in the ACTH and cortisol response in the combined DEX/CRH test. Here we review new data on the efficacy and mechanism of action of lithium augmentation.