Background: Depression affects more women than men and often aggregates in families. Using a community-based sample of twins, we examined the contributions of genetic and environmental factors to the risk of developing major depressive disorder and the effect of sex and different definitions of depression on the relative contributions of genetic and environmental effects. Sex differences in genetic effects were also studied. Methods: A volunteer sample of Australian twins (2662 pairs) was interviewed using an abbreviated version of the Semi-Structured Assessment for the Genetics of Alcoholism, a semi-structured lay interview designed to assess psychiatric disorders. Depression was defined using 3 different criteria sets: DSM-III-R major depressive disorder, DSM-IV major depressive disorder, and severe DSM- IV major depressive disorder. Genetic and environmental contributions to the liability to develop depression were estimated using genetic model fitting. Results: Lifetime prevalences were 31% in women and 24% in men for DSM-III-R major depressive disorder, 22% in women and 16% in men for DSM-IV major depressive disorder, and 9% in women and 3% in men for severe DSM-IV major depressive disorder. In women, the simplest model to fit the data implicated genetic factors and environmental factors unique to the individual in the development of depression, with heritability estimates ranging from 36% to 44%. In men, depression was only modestly familial, and thus individual environmental factors played a larger role in the development of depression. For DSM-III-R major depressive disorder, there were statistically different estimates for heritability for men vs women. For both sexes, the relative contributions of genetic and environmental factors were stable using different definitions of depression. Conclusions: There was moderate familial aggregation of depression in women and this primarily was attributable to genetic factors. In men, there was only modest familial aggregation of depression. For both men and women, individual environmental experiences played a large role in the development of depression. Major depressive disorder as defined by DSM-III-R was more heritable in women as compared with men. The relative contributions of genetic and environmental factors in the development of depression were similar for varying definitions of depression, from a broad definition to a narrow definition.