The causes of depression in the elderly are poorly understood. The concept that psychological and social factors are the primary contributors to the occurrence of depression in later life, though intuitively appealing, is not supported by available evidence. In addition, genetic factors are less significant in patients presenting with depression for the first time in later life. In this article, the following hypotheses are examined: (1) the aging process facilitates emergence of depression in later life; (2) cerebrovascular pathology plays a role in the etiology of depression in the elderly; and (3) the site and location of changes in the brain provide a basis for understanding neuroanatomic substrates of depression in the elderly. The role of the basal ganglia and different basal ganglia circuits in the pathophysiology of depression is discussed. The clinical significance of the findings of structural changes in the brain are also discussed.