In recent years, considerable data have emerged that psychotic (delusional) depression is characterized by pronounced increases in hypothalamic-pituitary-adrenal (HPA) axis activity and positive responses to combined treatment with tricyclic antidepressants and antipsychotic (dopamine-blocking) agents. Recently, a number of observations in several species, including man, point to glucocorticoids' increasing dopamine activity in a variety of tissues and this effect is particularly marked in rat brain mesolimbic dopamine systems. We propose that glucocorticoids' enhancement of dopaminergic activity may explain the development of psychosis/delusions in the context of the depressive episode. Data in support of the hypothesis are presented and the identification of possible enzymatic risk factors are discussed. These interactions also have implications for understanding the biology of corticosteroid-induced psychoses in medical patients and some of the psychiatric complications of Cushing's Disease.