The aim of this review is to evaluate the placebo effect in the treatment of anxiety and depression. Antidepressants are supposed to work by fixing a chemical imbalance, specifically, a lack of serotonin or norepinephrine in the brain. However, analyses of the published and the unpublished clinical trial data are consistent in showing that most (if not all) of the benefits of antidepressants in the treatment of depression and anxiety are due to the placebo response, and the difference in improvement between drug and placebo is not clinically meaningful and may be due to breaking blind by both patients and clinicians. Although this conclusion has been the subject of intense controversy, the current article indicates that the data from all of the published meta-analyses report the same results. This is also true of recent meta-analysis of all of the antidepressant data submitted to the Food and Drug Administration (FDA) in the process of seeking drug approval. Also, contrary to previously published results, the new FDA analysis reveals that the placebo response has not increased over time. Other treatments (e.g., psychotherapy and physical exercise) produce the same benefits as antidepressants and do so without the side effects and health risks of the active drugs. Psychotherapy and placebo treatments also show a lower relapse rate than that reported for antidepressant medication.