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OBJECTIVE: To investigate the efficacy of intervention by a psychogeriatric team in the treatment of depression in elderly disabled people receiving home care from their local authority. DESIGN: Randomised controlled trial with blind follow up six months after recruitment. SETTING: Community of south east London. SUBJECTS: 69 people aged 65 or over who received home care and were depressed according to criteria of the standardised automatic geriatric examination for computer assisted taxonomy (AGECAT). 33 were randomly allocated to an intervention group and 36 to a control group. INTERVENTION: Members of the intervention group received an individual package of care that was formulated by the community psychogeriatric team in their catchment area and implemented by a researcher working as a member of that team. The control group received normal general practitioner care. MAIN OUTCOME MEASURES: Recovery from depression (AGECAT case at recruitment but non-case at follow up). RESULTS: Data were analysed on an intention to treat basis. 19 (58%) of the intervention group recovered compared with only nine (25%) of the control group, a difference of 33% (95% confidence interval 10% to 55%). This powerful treatment effect persisted after controlling for possible confounders in logistic regression analysis, with members of the intervention group more likely than members of the control group to have recovered at follow up (odds ratio 9.0 (2.0 to 41.5)). This did not seem to be a simple effect of antidepressant prescription: use of antidepressants at follow up did not have a significant effect (multiply adjusted odds ratio 0.3 (0.0 to 1.9)). CONCLUSIONS: Depression is treatable in elderly people receiving home care. Therapeutic nihilism based on an assumed poor response to treatment in these socially isolated, disabled elderly people in the community is not supported.