Women are at a higher risk than men to develop mood disorders and depression. The increased risk is associated with fluctuating estrogen levels that occur during reproductive cycle events, particularly during the menopausal transition, a time characterized by drastic fluctuations in estrogen levels and increases in new onset and recurrent depression. Conversely, recent data show that hormone therapy, particularly transdermal estradiol formulations, may prevent mood disorders or even serve as a treatment regimen for women with diagnosed mood disturbances via estrogen regulation. While the exact mechanism is unknown, there is compelling scientific evidence indicating the neuromodulatory and neuroprotective effects of estrogen, which are directly relevant to mood symptomotology. Specifically, affective regulation has been linked to neural structures rich in estrogen receptors and estrogenic regulation of neurotransmitters. While a wealth of basic science, observational and clinical research support this rationale, potential mediating variables, such as estrogen formulation, proximity of administration to menopause, and the addition of progestins should be considered. Furthermore, the nature of postmenopausal exogenous hormone formulations in relation to premenopausal endogenous levels, as well as the ratio of estrone to estradiol warrant consideration.