Depression is a disease with which man would be in a low mental state and have decreased physiological vitality. The author thinks that this disease is located in the Shaoyang Channels, with the heart, liver, kidney, spleen and stomach involved. However, the affection always centers in the Shaoyang Channels. The functional activities, the ascending and descending, in and out of qi in the other organs, all depend on the generation and development of gallbladder-qi and the function of the gallbladder in pivoting qi. "The qi activities in the twelve channels must be inspired by the qi activities of the liver and gallbladder, and can disease only be avoided when qi in these organs has got free flow." Abnormal distribution of the ministerial fire constitutes the basic mechanism for the onset of depression. According to the pathogeneses and clinical manifestations, the syndrome of depression can be divided into three types, namely, flaming-up of gallbladder-fire, stagnation in Shaoyang and failure of ministerial fire in dispersing, and stagnation in Shaoyang and insufficiency of ministerial fire. The deficiency and excess of vital-qi and pathogenic factors of the three types are different. Based on the principle of 'soothing the depressed liver, and dispersing the depressed fire', removing stagnation and promoting unrestrained flow of qi should be taken as the main principle in the treatment of depression. Xiao Chaihu Tang should be used as the main prescription for its action of qi-pivoting and Shaoyang-dispersing. Based on the actual condition of the vital-qi and the pathogenic-qi, symptomatologic modifications can be done in the prescription for directly removing the pathogenic factors, or for reinforcing and reducing at the same time by using herbs of cold and warm natures.