Depressive realism is the hypothesis developed by Alloy and Abramson that depressed individuals make more realistic inferences than non-depressed individuals. Although depressed individuals are thought to have a negative cognitive bias that results in recurrent, negative automatic thoughts, maladaptive behaviors, and dysfunctional world beliefs, depressive realism argues not only that this negativity may reflect a more accurate appraisal of the world but also that non-depressed individuals’ appraisals are positively biased. This theory remains very controversial as it brings into question the mechanism of change that cognitive behavioral therapy for depression purports to target. While the evidence currently supports the validity of depressive realism, its effect may be restricted to a select few situations.