The treatment of affective disorders continues to present significant clinical challenges, notwithstanding the existence of available mood stabilizers and antidepressants. These difficulties include incomplete response, relapse, and intolerable medication side effects. Fundamental to the therapeutic impasse is incomplete knowledge concerning the neurobiology of mood disorders. Although some relevant biochemical pathways have been identified, including abnormalities of monoamine neurotransmission and of immunological functioning, a fuller understanding is likely to embrace other interrelated pathways. Arachidonic acid (AA) and prostaglandins (PGs) are important second messengers in the central nervous system that participate in signal transduction, inflammation and other vital processes. Their release, turnover, and metabolism represent the ‘arachidonic acid cascade’. A significant body of diverse clinical and preclinical research suggests that the AA cascade may be important in affective states. This paper reviews the literature describing the association of affective illness with AA and its metabolites. Possible links between this and other prevailing hypotheses are considered, and implications for further research and for treatment are discussed.