Background. Poor physical health has long been recognized to be one of the most important risk factors for depression in older adults. Since many aspects of physical health can be targeted for improvement in primary care, it is important to know whether physical health problems predict the onset and/or the persistence of depression. Methods. The study is based on a sample which at the outset consisted of 327 depressed and 325 non-depressed older adults (55-85) drawn from a larger random community-based sample in the Netherlands. Depression was measured using the Center for Epidemiologic Studies Depression scale (CES-D) at eight successive waves. Results. From all incident episodes, the majority (57%) was short-lived. These short episodes could generally not be predicted by physical health problems. The remaining incident episodes (43%) were not short-lived and could be predicted by poor physical health. Chronicity (34%) was also predicted by physical health problems. Conclusions. The study design with its frequent measurements recognized more incident cases than previous studies; these cases however did have a better prognosis than is often assumed. The prognosis of prevalent cases was rather poor. Physical health problems were demonstrated to be a predictor of both the onset and the persistence of depression. This may well have implications for prevention and intervention.