Self-esteem lability (SEL), defined as daily event-related variability in state self-esteem, and low trait self-esteem (TSE) were assessed among 205 male and female undergraduates who were currently depressed (CD), previously depressed (PD), and never depressed (ND). SEL scores were derived for the effect of positive, negative, and combined events on state self-esteem over 30 days. Consistent with psychodynamic and cognitive theories, SEL was found to be a better index of depression proneness than TSE. PD Ss showed higher lability on all SEL scores than ND controls but did not differ from controls on TSE. Ss were reassessed 5 months later, and new cases showed higher premorbid SEL than ND controls but did not differ from controls on premorbid TSE. SEL at Time 1 was found to increase risk for depression at Time 2 among Ss reporting high life stress at Time 2. Theoretical and methodological implications are discussed.