BACKGROUND: Major depression is the fourth leading cause of disability worldwide and poses a socioeconomic burden worldwide. Transcutaneous vagus nerve stimulation (tVNS) is a promising noninvasive clinical device that may reduce the severity of major depression. However, the neural mechanism underlying continuous tVNS has not yet been elucidated. OBJECTIVE: We aimed to explore the effect of hypothalamic subregion functional connectivity (FC) changes during continuous tVNS treatment on major depressive disorder (MDD) patients and to identify the potential biomarkers for treatment outcomes. METHODS: Forty-one mild to moderate MDD patients were recruited and received either real or sham tVNS treatment for 4 weeks. We used a seed-to-whole brain approach to estimate the FC changes of hypothalamic subregions and their surrounding control areas during continuous tVNS treatment and explored their association with clinical outcome changes after 4 weeks of treatment. RESULTS: Of the thirty-six patients that completed the study, those in the tVNS group had significantly lower scores on the 24-item Hamilton Depression (HAM-D) Rating Scale compared to the sham tVNS group after 4 weeks of treatment. The FC between the bilateral medial hypothalamus (MH) and rostral anterior cingulate cortex (rACC) was significantly decreased during tVNS but not during sham tVNS. The strength of this FC was significantly correlated with HAM-D improvements after 4 weeks of tVNS. CONCLUSION: The FC between the bilateral MH and rACC may serve as a potential biomarker for the tVNS state and predict treatment responses. Our results provide insights into the neural modulation mechanisms of continuous tVNS and reveal a potential therapeutic target for MDD patients.