Background: Our study described the neuropsycbological profile of psychotic major depression (PMD) compared to nonpsycbotic major depression (NPMD) patients and psychiatrically healthy controls (HC). We predicted that higher cortisol levels would be associated with greater cognitive deficits. Methods. Twenty-nine PMDs, 24 NPMDs, and 26 HCs were recruited at Stanford University Medical Center. Psychiatric ratings, cortisol levels from 1800-0900 hours, and neuropsycbological test data were obtained. Results. PMDs bad more severe cognitive impairments compared with NPMDs and HCs with the exception of simple verbal attention. PMDs had elevated mean cortisol levels from 1800 to 0100 hours which were significantly correlated with poorer verbal memory and psychomotor speed performance. Cortisol slopes from 1800 to 0100 hours were also significantly correlated with verbal memory and working memory. Conclusions. Wbile PMD's ability to attendpassively to information appeal's intact, they have more difficulty processing, manipulating, and encoding new information. Elevated cortisol levels, as seen in PMD patients, are associated with poorer cognitive performance especially related to verbal memory for lists of words and working memory.