Major depression is characterized by a cluster of symptoms that includes hopelessness, low mood, feelings of worthlessness and inability to experience pleasure. The lifetime prevalence of major depression approaches 20%, yet current treatments are often inadequate both because of associated side effects and because they are ineffective for many people. In basic research, animal models are often used to study depression. Typically, experimental animals are exposed to acute or chronic stress to generate a variety of depression-like symptoms. Despite its clinical importance, very little is known about the cellular and neural circuits that mediate these symptoms. Recent advances in circuit-targeted approaches have provided new opportunities to study the neuropathology of mood disorders such as depression and anxiety. We review recent progress and highlight some studies that have begun tracing a functional neuronal circuit diagram that may prove essential in establishing novel treatment strategies in mood disorders. First, we shed light on the complexity of mesocorticolimbic dopamine (DA) responses to stress by discussing two recent studies reporting that optogenetic activation of midbrain DA neurons can induce or reverse depression-related behaviors. Second, we describe the role of the lateral habenula circuitry in the pathophysiology of depression. Finally, we discuss how the prefrontal cortex controls limbic and neuromodulatory circuits in mood disorders.