The purpose of this study was to determine whether demographic and clinical factors are associated with a diagnosis of depression among persons with schizophrenia and to determine the association of depression with subjective quality of life. A consecutively admitted sample of psychiatric inpatients diagnosed with schizophrenia (n = 123) were assessed for depression and quality of life. Logistic regression was used to determine factors associated with a diagnosis of depression. Multiple regression analyses were used to determine the relationship between depression and quality of life. The odds of being diagnosed with depression were seven times greater in Caucasians than in African-Americans, and three times greater in persons who were ever married. Depression was significantly associated with reduced life satisfaction in Caucasians but not African-Americans. This suggests the importance of race as a predictor of a diagnosis of depression in schizophrenia and the possibility of underdiagnosis of depression among African-Americans. The absence of the expected association between depression and quality of life in African-Americans casts doubt on the validity of the depression diagnosis using conventional diagnostic tools.