Psychotic depression, also known as depressive psychosis, is a major depressive episode that is accompanied by psychotic symptoms. It can occur in the context of bipolar disorder or major depressive disorder. Psychotic depression can be difficult to distinguish from schizoaffective disorder, a diagnosis that requires the presence of psychotic symptoms for at least two weeks without any mood symptoms present. Unipolar psychotic depression requires that psychotic symptoms occur during severe depressive episodes, although residual psychotic symptoms may also be present in between episodes (e.g., during remission, mild depression, etc.). Diagnosis using the DSM-5 involves meeting the criteria for a major depressive episode, along with the criteria for "mood-congruent or mood-incongruent psychotic features" specifier.

People with psychotic depression experience the symptoms of a major depressive episode, along with one or more psychotic symptoms, including delusions and/or hallucinations. Delusions can be classified as mood congruent or incongruent, depending on whether or not the nature of the delusions is in keeping with the individual's mood state. Common themes of mood congruent delusions include guilt, persecution, punishment, personal inadequacy, or disease. Half of patients experience more than one kind of delusion. Delusions occur without hallucinations in about one-half to two-thirds of patients with psychotic depression. Hallucinations can be auditory, visual, olfactory (smell), or tactile (touch), and are congruent with delusional material. Affect is sad, not flat. Severe anhedonia, loss of interest, and psychomotor retardation are typically present.

Psychotic symptoms tend to develop after an individual has already had several episodes of depression without psychosis. However, once psychotic symptoms have emerged, they tend to reappear with each future depressive episode. The prognosis for psychotic depression is not considered to be as poor as for schizoaffective disorders or primary psychotic disorders. Still, those who have experienced a depressive episode with psychotic features have an increased risk of relapse and suicide compared to those without psychotic features, and they tend to have more pronounced sleep abnormalities.

Family members of those who have experienced psychotic depression are at increased risk for both psychotic depression and schizophrenia.

Most patients with psychotic depression report having an initial episode between the ages of 20 and 40. As with other depressive episodes, psychotic depression tends to be episodic, with symptoms lasting for a certain amount of time and then subsiding. While psychotic depression can be chronic (lasting more than 2 years), most depressive episodes last less than 24 months. People who received appropriate treatment for psychotic depression went into "remission" and have reported a quality of life similar to that of people without PD.

There are a number of biological features that may distinguish psychotic depression from non-psychotic depression. The most significant difference may be the presence of an abnormality in the hypothalamic pituitary adrenal axis (HPA). The HPA axis appears to be dysregulated in psychotic depression, with dexamethasone suppression tests demonstrating higher levels of cortisol following dexamethasone administration (i.e. lower cortisol suppression). Those with psychotic depression also have higher ventricular-brain ratios than those with non-psychotic depression.

Psychotic symptoms are often missed in psychotic depression, either because patients do not think their symptoms are abnormal or they attempt to conceal their symptoms from others. On the other hand, psychotic depression may be confused with schizoaffective disorder. Due to overlapping symptoms, differential diagnosis includes also dissociative disorders.

Several treatment guidelines recommend pharmaceutical treatments that include either the combination of a second-generation antidepressant and atypical antipsychotic or tricyclic antidepressant monotherapy or electroconvulsive therapy (ECT) as the first-line treatment for unipolar psychotic depression.