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The increased risk of major depression in the offspring of depressed parents is well known. Whether the risk is transmitted beyond 2 generations is less well known. To our knowledge, no published study with direct interviews of family members and the generations in the age of risk for depression has evaluated beyond 2 generations. This information is important for detecting individuals at highest risk who may benefit from early intervention.To examine the familial aggregation of psychiatric disorder and functioning in grandchildren by their biological parents’ and grandparents’ depression status.Longitudinal retrospective cohort family study of 251 grandchildren (generation 3 [mean age, 18 years]) interviewed a mean of 2.0 times and their biological parents (generation 2) interviewed a mean of 4.6 times and grandparents (generation 1) interviewed up to 30 years. The study dates were January 1982 (wave 1) to June 2015 (wave 6).Cumulative rates of psychiatric disorders and functioning collected for all generations by clinically trained interviewers and best-estimate diagnosis made blind to diagnoses in members of previous generations.There were 91 families (G1) in the original sample, of whom 77 were eligible for inclusion (had a grandchild older than 5 years), and 80.5% (62 of 77) participated in the study. When first examining only 2 generations, the biological children (generation 3) of depressed compared with nondepressed parents (generation 2) had 2-fold increased risk for major depressive disorder (MDD) (hazard ratio [HR], 2.02; 95% CI, 1.08-3.79; P = .03), any disruptive disorder (HR, 1.70; 95% CI, 1.05-2.75; P = .03), substance dependence (HR, 2.96; 95% CI, 1.24-7.08; P = .01), any suicidal ideation or gesture (HR, 2.44; 95% CI, 1.28-4.66; P = .007), and poor functioning (F = 38.25, P < .001). When 3 generations were examined stratified by parental and grandparental depression status, association of a parent’s MDD on the grandchild’s MDD but not other disorders varied with the grandparent’s depression status: grandchildren with both a depressed parent and grandparent (n = 38) were at highest risk for MDD. Among grandchildren without a depressed grandparent, those with (n = 14) vs without (n = 74) a depressed parent had overall poorer functioning (F = 6.31, P = .01) but not higher rates of any of the disorders. Potential confounding variables did not have a meaningful effect on the association between grandchild outcomes and parental or grandparental depression.In this study, biological offspring with 2 previous generations affected with major depression were at highest risk for major depression, suggesting the potential value of determining family history of depression in children and adolescents beyond 2 generations. Early intervention in offspring of 2 generations affected with moderate to severely impairing MDD seems warranted. The specificity of the transmission of depression across 3 generations may make this group a homogeneous sample for biological marker studies.