The recognition of depression was examined in 987 medical and surgical patients referred to a consultation-liaison psychiatry service. Overall concordance of recognition of depression by the referring doctor and diagnosis of depression by the consultant psychiatrist was 74%; 41% false-positive rate, 15% false-negative rate. Concordance was higher in the Renal Unit and lower in the General Medical Unit. Patients for whom there was discordance were significantly older than those for whom there was concordance. Patients referred for depression but not diagnosed as such by psychiatrists received DSM-III-R diagnoses of Organic Mental Disorder, Somatoform and Related Disorders, Psychoactive Substance Use Disorders and Personality Disorders. On the other hand, patients diagnosed as having depression but not referred as such were referred instead for ill-defined reasons (suspected psychological component to illness, coping problems), suicide risk evaluation and routine pre-operative or pre-dialysis assessment. The results highlight the continuing misdiagnosis of psychiatric disorders, especially Organic Mental Disorders, as well as the mislabelling of the syndrome described by psychiatrists as depression. This is part of the wider problem of defining the boundaries of a clinical depressive syndrome in the physically ill.