The impact of clinically diagnosed depression on recovery in activities of daily living over a 2-year follow-up was examined in a prospective study of 63 stroke patients. Although impairment in activities of daily living, neurologic diagnoses and findings, lesion location and volume as measured on computed tomographic scan, demographic variables, cognitive impairment, and social functioning were comparable between depressed (n = 25) and nondepressed (n = 38) patients during their acute hospitalization, the two groups had different patterns of recovery in activities of daily living. At 2 years after suffering a stroke, patients with an in-hospital diagnosis of depression (either major or minor depression) were significantly more impaired in both physical activities and language functioning than were non-depressed patients. Among patients with major depression, this disparity in the recovery profile was present even after the depression had remitted. This study emphasizes the need for early recognition and treatment of poststroke depression.