This review describes the development of cognitive therapy (CT) for depression in the 1960s and 1970s and its application to diverse clinical populations. The question of how CT works, in terms of both active therapeutic ingredients and mechanisms of change within the individual, is addressed. The limitations of CT are discussed, as well as recent developments and modifications of the therapy that have evolved in response to these perceived limitations and that bring it closer to other therapy approaches. The review concludes with some directions for future research.