Background: Psychotic major depression (PMD) is a severe mental disorder characterized by high levels of illness severity, chronicity, impairment, and treatment resistance. However, most past research oil PMD has been conducted in inpatient hospital samples, and relatively little is known about PMD patients presenting for treatment in the community specifically. Methods: In this study, we examined the prevalence and clinical characteristics of PAID in a large sample (77 = 2,500) of treatment-seeking outpatients who were administered structured clinical interviews by trained diagnosticians. Results: Of the patients diagnosed with major depression, 5.3% had psychotic features. PMD patients were more likely to be members of a racial/ethnic minority and to have lower educational attainment compared to those with nonpsychotic major depression. In addition, PMD patients were found to have greater current depression severity, suicidal ideation, and social and work impairment. These patients also were more likely to have histories of suicide attempts and psychiatric hospitalizations, to report all earlier age of illness onset, and to meet criteria for chronic depression. In terms of psychiatric comorbidity, PMD patients had higher rates of certain anxiety disorders as well as more somatoform and cluster A personality disorders. Conclusions: Results indicated that PMD was present in a relatively small percentage of treatment-seeking outpatients but was associated with disproportionately high levels of severity and impairment. Similarities and differences between the current findings and those from past research are discussed, including clinical implications for the identification and treatment of PMD in routine practice If settings. Depression and Anxiety 26.54-64, 2009. (c) 2008 Wiley-Liss, Inc.