Background: Relatively little is known about the prevalence and correlates of overdiagnosis of depression in community settings. This study examined the extent to which individuals with clinician-identified depression in the community meet the criteria for DSM-IV major depressive episodes (MDE) and characteristics of these individuals. Methods: In a sample of 5,639 participants with clinician-identified depression drawn from the 2009-2010 United States National Survey of Drug Use and Health, the proportion of participants who met the 12-month MDE criteria, ascertained by a structured interview, and variations in MDE diagnosis across different groups of participants were examined. Mental health profiles and service use of participants who met the MDE criteria were compared to those who did not meet these criteria. Results: Only 38.4% of participants with 12-month clinician-identified depression met the 12-month MDE criteria. Older adults were less likely than younger adults to meet the criteria - only 14.3% of those 65 years old or older met the criteria, whereas participants with more education and those with poorer overall health were more likely to meet the criteria. Participants who did not meet the 12-month MDE criteria reported less distress and impairment in role functioning and used fewer services. A majority of both groups, however, were prescribed and used psychiatric medications. Conclusions: Depression overdiagnosis and overtreatment is common in community settings in the USA. There is a need for improved targeting of diagnosis and treatments of depression and other mental disorders in these settings.