BACKGROUND This study set out to estimate the 12-month prevalence of DSM-III-R major depressive episode (MDE) and to analyse factors associating with psychosocial impairment, episode duration, phenomenology and symptom severity in a representative general population sample of adolescents (15-19-year-olds) and young adults (20-24-year-olds). METHOD The Finnish Health Care Survey '96 (FINHCS '96) was a cross-sectional nationwide epidemiological study. A random sample of 509 adolescents and 433 young adults was interviewed in 1996. MDE was assessed by University of Michigan Composite Diagnostic Interview Short-Form. RESULTS The 12-month prevalence of MDE was 5.3 % for adolescents (females 6.0%, males 4.4%) and 9.4% for young adults (females 10.7%, males 8.1%). When moderate psychosocial impairment was included in case definition, the prevalences were lowered by 20-25%. Increased impairment was associated with drunkenness at least twice a month, a higher mean number of depressive symptoms and impaired concentration. The median episode duration was 1 month. No factors associating with duration were found. With the exception of symptoms related to appetite being more common among females than males, the phenomenology of MDE was mainly independent of age and gender. CONCLUSIONS Episodes of major depression among adolescents and young adults in the general population are short but often associated with psychosocial impairment, especially if frequent drunkenness coexists.