Depressive symptoms are common in the elderly and they have been associated with cognitive and functional impairment. However, relatively less is known about the relationship of a lifetime history of depression to cognitive impairment and functional status. The aim of this cross-sectional study was to assess whether current depressive symptoms and past depression are associated with cognitive or functional impairment in a community-based sample representative of east Sydney, Australia. We also examined whether there was an interaction between current and past depression in their effects on cognitive performance. Eight hundred non-demented aged participants received a neuropsychological assessment, a past psychiatric history interview and the 15-item Geriatric Depression Scale. The Bayer-Activities of Daily Living scale was completed by an informant to determine functional ability. Clinically relevant depressive symptoms were present in 6.1% of the sample and 16.6% reported a history of depression. Participants with current depression had significantly higher levels of psychological distress and anxiety, and lower life satisfaction and performed worse on memory and executive function compared to participants without current depression. After controlling for anxiety the effect on executive function was no longer significant while the effect on memory remained significant. A history of depression was associated with worse executive function, higher levels of psychological distress and anxiety, and lower life satisfaction. After controlling for psychological distress the effect of past depression on executive function was no longer significant. There were no significant interactions between current and past depression in their effects on cognitive performance. There were no differences between participants with or without current depression and with or without past depression on functional abilities. These results support the view that current and past depressive episodes are associated with poorer cognitive performance but not with functional abilities.