The effects of experimentally induced mood states on recall of target words embedded in sentences or alone were examined in three experiments. All experiments focused on the role of a depressed-mood induction on recall and looked at the effects of elaborative encoding, semantic processing, or cognitive effort. The overall effect of the depressed-mood state was to reduce recall in all three situations; however, the opportunity to process information semantically still led to superior recall in the depressed condition. In contrast, the superiority of recall of high-effort items disappeared in the depressed condition, suggesting that subjects may differentially allocate resources when under a depressed-mood state. The results are briefly discussed within the framework of a resource allocation theory.