Objective: Dysfunction of the hippocampus has long been suspected to be a key component of the pathophysiology of major depressive disorder. Despite evidence of hippocampal structural abnormalities in depressed patients, abnormal hippocampal functioning has not been demonstrated. The authors aimed to link spatial navigation deficits previously documented in depressed patients to abnormal hippocampal functioning using a virtual reality navigation task. Method: Whole-head magnetoencephalography (MEG) recordings were collected while participants (19 patients diagnosed with major depressive disorder and 19 healthy subjects matched by gender and age) navigated a virtual Morris water maze to find a hidden platform; navigation to a visible platform served as a control condition. Behavioral measures were obtained to assess navigation performance. Theta oscillatory activity (4-8 Hz) was mapped across the brain on a voxel-w ise basis using a spatial-filtering MEG source analysis technique. Results: Depressed patients performed worse than healthy subjects in navigating to the hidden platform. Robust group differences in theta activity were observed in right medial temporal cortices during navigation, with patients exhibiting less engagement of the anterior hippocampus and parahippocampal cortices relative to comparison subjects. Left posterior hippocampal theta activity was positively correlated with individual performance within each group. Conclusions: Consistent with previous findings, depressed patients showed impaired spatial navigation. Dysfunction of right anterior hippocampus and parahippocampal cortices may underlie this deficit and stem from structural abnormalities commonly found in depressed patients.