The molecular mechanisms underlying major depressive disorder remain poorly understood, and current antidepressant treatments have many shortcomings. The recent discovery that a single intravenous infusion of ketamine at a subanesthetic dose had robust, rapid and sustained antidepressant effects in individuals with treatment-resistant depression inspired tremendous interest in investigating the molecular mechanisms mediating ketamine's clinical efficacy as well as increased efforts to identify new targets for antidepressant action. We review the clinical utility of ketamine and recent insights into its mechanism of action as an antidepressant, including the roles of -methyl-D-aspartate receptor inhibition, α-amino-3-hydroxy-5-methyl-4-isoxazolepropionic acid receptor upregulation, activation of downstream synaptogenic signalling pathways and the production of an active ketamine metabolite, hydroxynorketamine. Emerging knowledge of the molecular mechanisms underlying both ketamine's positive therapeutic and detrimental side effects will aid the development of a new generation of much-needed superior antidepressant agents.