Functional abnormalities in emotion-related brain systems have been implicated in depression, and depressed patients may therefore attribute emotional valence to stimuli that are normally interpreted as emotionally neutral. The present study examined this hypothesis by comparing recognition of different facial expressions in patients with moderate to severe depression. Eighteen depressed patients and 18 matched healthy controls made a forced-choice response to briefly presented neutral, happy, and sad faces. Recognition accuracy and response time were measured. Twelve patients were retested after showing signs of symptom remission. Depressed patients and controls were equally accurate at recognizing happy and sad faces. Controls also recognized neutral faces as accurately as happy and sad faces, but depressed patients recognized neutral faces less accurately than either happy or sad faces. Depressed patients were also particularly slow to recognize neutral faces. The impairment in processing of neutral faces was still evident after symptom remission. Error analyses showed that depressed patients attributed not only sadness, but also happiness (in remission), to neutral faces. These results suggest that, unlike healthy subjects, depression-prone individuals do not seem to perceive neutral faces as unambiguous signals of emotional neutrality.