This study examined quantitative measures of sleep electroencephalogram (EEG) and phasic rapid eye movements (REM) as correlates of remission and recovery in depressed patients. To address correlates of remission, pre-treatment EEG sleep studies were examined in 130 women outpatients with major depressive disorder treated with interpersonal psychotherapy (IPT). To address correlates of recovery, baseline and post-treatment EEG sleep studies were examined in 23 women who recovered with IPT alone and 23 women who recovered with IPT+fluoxetine. Outcomes included EEG power spectra during non-rapid eye movement (NREM) sleep and REM sleep and quantitative REMs. IPT non-remitters had increased phasic REM compared with remitters, but no significant differences in EEG power spectra. IPT+fluoxetine recoverers, but not IPT recoverers, showed increases in phasic REM and REM percentage from baseline to recovery. In NREM sleep, the IPT+fluoxetine group showed a decrease in alpha power from baseline to recovery, while the IPT group showed a slight increase. The number of REMs was a more robust correlate of remission and recovery than modeled quantitative EEG spectra during NREM or REM sleep. Quantitative REMs may provide a more direct measure of brainstem function and dysfunction during REM sleep than quantitative sleep EEG measures.