Physical ill health is known to be a risk factor for depression. However, little is known about the relationship between chronic illness and depression in older people living in residential homes. This study looked at the differences in the level of depressive symptoms between patients with different types of chronic illness, and the relationship between chronic illness and depression when other risk factors of depression were controlled for. Four hundred and twenty-four people living in residential homes in the Netherlands were included in the study. Residents with cognitive impairment were excluded. The degree of depression was assessed with the Geriatric Depression Scale (GDS) and psychological distress was measured with the MOS-SF-20 mental health sub-scale. Other risk factors included functional impairment, earlier depression, degree of pain, life events and social support. Few residents had no chronic illness and almost half of them had more than one illness. There was only modest evidence to suggest that chronic illnesses were related to depressive symptomatology or psychological distress. However, other risk factors were found to be much stronger predictors of depression and psychological distress. The results should be treated with caution because of the limitations of the study. Nevertheless, the results suggest that chronic illness is not the best predictor of depression in people living in residential care homes.