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Japan's prototype of depression was traditionally a melancholic depression based on the premorbid personality known as shūchaku-kishitsu proposed by Mitsuzo Shimoda in the 1930s. However, since around 2000, a novel form of depression has emerged among Japanese youth. Called ‘modern type depression (MTD)’ by the mass media, the term has quickly gained popularity among the general public, though it has not been regarded as an official medical term. Likewise, lack of consensus guidelines for its diagnosis and treatment, and a dearth of scientific literature on MTD has led to confusion when dealing with it in clinical practice in Japan. In this review article, we summarize and discuss the present situation and issues regarding MTD by focusing on historical, diagnostic, psychosocial, and cultural perspectives. We also draw on international perspectives that begin to suggest that MTD is a phenomenon that may exist not only in Japan but also in many other countries with different sociocultural and historical backgrounds. It is therefore of interest to establish whether MTD is a culture-specific phenomenon in Japan or a syndrome that can be classified using international diagnostic criteria as contained in the ICD or the DSM. We propose a novel diagnostic approach for depression that addresses MTD in order to combat the current confusion about depression under the present diagnostic systems.