Psychotherapeutic interventions often play a major role in the treatment of patients who are hospitalized for depression. Much of the “therapeutic milieu” of the inpatient unit includes patient participation in group psychotherapy and in one-on-one psychotherapy with staff members. These interventions are designed not only to be primary treatments for depression, but are also used to enhance patients' compliance with pharmacotherappy. Cognitive therapy (CT) has been adapted for use with inpatients and has been used as an organizing theory for the hospital milieu in several inpatient units. Research on inpatient CT suggests that it is a beneficial treatment that enhances continuity of care after discharge from the hospital. This paper describes the general principles of inpatient CT, and discusses the various types of inpatient cognitive therapy units (CTUs) that have been developed. The benefits of such programs are described, and research regarding the effectiveness of inpatient CT is discussed.