Depression in mothers of young children is a common condition, and is highly associated with disturbance in the children and with later reading delay. A group of depressed and control women with children aged two and three was interviewed and observed at home and the children assessed. The depressed women had more difficult backgrounds and more current adversity than the controls. They played and talked as much with their children, but the quality of interaction was less satisfactory, with poorer ‘meshing’, more distress and more unresolved conflict. Social policy and service implications are discussed.