The addition of lithium salts to the treatment regime of depressed patients who have failed to respond to adequate courses of antidepressant drugs shows great promise in meeting the considerable challenge of refractory depression. Although the mechanisms whereby lithium exerts its augmentatory action have not been fully elucidated, the available evidence supports the hypothesis that lithium-induced enhancement of serotonergic neurotransmission is involved. Enhancement or stabilization of cholinergic neurotransmission, and inhibition of the phosphoinositide second messenger system may also be relevant. In view of lithium's well established efficacy as an antidepressant in its own right, it is also unclear whether a separate augmentatory mechanism needs to be invoked, rather than an additive synergistic action with concurrently administered conventional antidepressants. Several case reports suggest that lithium augmentation may be effective in otherwise extremely refractory cases of depression. Despite a number of methodological limitations, the body of evidence from open and placebo controlled clinical trials suggests strongly that a response rate to lithium augmentation of about 60 per cent may be expected. Further clinical trials are needed to clarify the characteristics of likely responders to lithium augmentation, and the use of neuroendocrine probes may be particularly useful in elucidating the neurotransmitter mechanisms involved.