Major depressive disorder is a debilitating mental illness that seriously endangers human health. Its pathogenesis is highly complex, and traditional treatments face substantial challenges. A growing body of preclinical and clinical findings highlight the important role of the gut microbiome in the pathogenesis of depression and its potential as a diagnostic and therapeutic target. A deeper understanding of how the gut microbiome regulates depression will greatly enhance its clinical application, improve diagnostic and treatment strategies, and pave the way for microbiota-based precision medicine for depression. In this review, we summarize the depression-associated compositional and functional microbial alterations, delineate their mechanistic contributions to disease pathogenesis, and evaluate their potentiality as novel diagnostic biomarkers and treatment targets. Finally, we consider the future potential of utilizing the gut microbiome to advance precision medicine approaches for depression.