Levels of the stress-sensitive hormone cortisol increase dramatically in the first 30-40min after waking, an effect known as the cortisol awakening response (CAR). There is considerable cross-sectional evidence that psychosocial stress is associated with an increased CAR, and the CAR has been found to be altered in the presence of stress-related diseases, including major depressive disorder (MDD). To date, no prospective longitudinal studies have examined whether individual differences in the CAR serve as a premorbid risk factor for MDD. In a sample of 230 late adolescents, clinical diagnoses of MDD were predicted from the CAR as well as other indicators of basal cortisol functioning gathered 1 year earlier, including: waking cortisol levels, bedtime cortisol levels, the size of the CAR, average cortisol, and the slope of the diurnal cortisol rhythm across the waking day. Age and gender, health and health behaviors, baseline neuroticism, exposure to stressful life events and past episodes of mood and anxiety disorders were included as covariates, to help ensure effects are attributable to the CAR rather than related variables. A higher baseline CAR was associated with a significantly increased risk of developing MDD by follow-up, even when excluding individuals with baseline MDD. No other baseline cortisol measures were significant prospective predictors of MDD. In summary, the CAR is a significant prospective risk factor for the development of MDD in young adults, providing some support for the possibility that a heightened CAR may play a role in the etiology of major depressive disorder.