The purpose of this study is to compare the prevalence of depression among different types of hospital departments. Furthermore, it compares different methods for assessment of its recognition by non-psychiatric physicians. 993 inpatients of internal, surgical, gynecological and physical rehabilitation wards of community hospitals were interviewed by research psychiatrists using the Clinical Interview Schedule. Ward physicians were asked to fill in a short questionnaire in order to assess whether they could correctly identify patients with mental illnesses. In addition, routine discharge diagnoses were assessed. Of the total sample, 13.3% suffered from depression. Depression was most frequent on physical rehabilitation units (24.2%), followed by surgical (9.8%) and internal (9.5%) wards. On gynecological wards, prevalence of depression was lowest (8.7%). Of those suffering from depression, 45.7% were identified as mentally ill by non-psychiatric ward physicians when using questionnaire data. Only 21.0% of the depressed received a psychiatric discharge diagnosis, which equals less than half of those identified by questionnaire. Of the total sample, 13.3% of patients suffered from depression. Depression was most frequent in physical rehabilitation units (24.2%), followed by surgical (9.8%) and internal (9.5%) wards. In gynecological wards, the prevalence of depression was the lowest (8.7%). Of those suffering from depression, 45.7% were identified as mentally ill by non-psychiatric ward physicians when using questionnaire data. Only 21.0% of the depressed received a psychiatric discharge diagnosis, less than half of those identified by the questionnaire. Depression is very common among inpatients of physical hospital departments. Unfortunately, depression is frequently overlooked in everyday clinical work. Routine discharge diagnoses give only very limited information about how often ward physicians recognize mental disorders. Furthermore, hospital discharge diagnoses should not be used for planning mental health services.