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The current Diagnostic and Statistical Manual of Mental Disorders (DSM-IV-TR) specifies that generalized anxiety disorder (GAD) should not be diagnosed if it occurs exclusively during an episode of a major depressive disorder (MDD) or another mood disorder. This hierarchy rule was intended to promote diagnostic parsimony, but may result in the loss of important clinical information. The goal of this study was to compare individuals with MDD, comorbid MDD and GAD, and GAD within the course of MDD at intake and 12-month follow-up on self-report measures, clinician ratings, and rates of comorbidity.Participants were divided into three diagnostic groups: MDD without GAD (n=124), comorbid MDD and GAD (n=59), and GAD within the course of MDD (n=166). All the participants completed a semi-structured clinical interview and self-report measures assessing psychopathology, temperament, and functional impairment. A subset of the total sample completed a follow-up assessment of 12 months postintake.Individuals with comorbid MDD and GAD and GAD within the course of MDD reported more psychopathology, negative affect, and functional impairment at intake than individuals with MDD only. The presence of GAD at intake, however, did not differentially predict symptom severity, functional impairment, or the presence of comorbidity at 12-month follow-up.Cross-sectional findings indicate that individuals with GAD within the course of MDD experience levels of psychopathology, functional impairment, and comorbidity similar to those found in individuals with comorbid GAD and MDD. Preliminary longitudinal findings, however, suggest that the presence of GAD in patients with MDD does not have prognostic significance. Depression and Anxiety, 2009. © 2009 Wiley-Liss, Inc.