The influence of stress and glucocorticoids on neuronal pathology has been demonstrated in animal and clinical studies. It has been proposed that stress-induced changes in the hippocampus may be central to the development of depression in genetically vulnerable individuals. New evidence implicates the prefrontal cortex (PFC) in addition to the hippocampus as a site of neuropathology in depression. The PFC may be involved in stress-mediated neurotoxicity because stress alters PFC functions and glucocorticoid receptors, the PFC is directly interconnected with the hippocampus, and metabolic alterations are present in the PFC in depressed patients. Postmortem studies in major depression and bipolar disorder provide the first evidence for specific neuronal and glial histopathology in mood disorders. Three patterns of morphometric cellular changes are noted: cell loss (subgenual PFC), cell atrophy (dorsolateral PFC and orbitofrontal cortex), and increased numbers of cells (hypothalamus, dorsal raphe nucleus). The relevance of cellular changes in mood disorders to stress and prolonged PFC development and a role of neurotrophic/neuroprotective factors are suggested, and a link between cellular changes and the action of therapeutic drugs is discussed. The precise anatomic localization of dysfunctional neurons and glia in mood disorders may reveal cortical targets for novel antidepressants and mood stabilizers.