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Background Estrogen has been considered as a potential antidepressant in postmenopausal women. Our goal was to study whether estrogen therapy is effective in treating depressive disorders in older postmenopausal women and to determine whether progestins are associated with a deterioration of mood. Methods After 2 weeks of single-blind placebo treatment in 87 patients, 57 were randomly assigned to receive 8 weeks of treatment with estradiol (.1 mg/day; n = 31) or placebo ( n = 26). All patients were then treated with medroxyprogesterone 10 mg/day for 2 weeks combined with the study patch. Depressive symptoms were rated with the 21-item Hamilton Depression and Center for Epidemiologic Studies Depression scales. Results A clinically significant antidepressant effect of estradiol was excluded after 8 weeks of estradiol treatment. The estradiol group and placebo group improved in depressive symptoms at a similar rate based on the Hamilton Depression Scale (40% decreases in depression for estradiol vs. 44% for placebo). No significant increase in depressive symptoms was demonstrated with the use of progestins; however, positive affect decreased slightly with the use of combined estradiol-medroxyprogesterone compared with medroxyprogesterone alone (5.8%, p = .027). Conclusions Estradiol cannot be considered as an effective treatment in postmenopausal women with mild to moderate depression.