Depressive realism refers to a cognitive style wherein depressed people sometimes have more accurate perceptions of reality than nondepressed people. The notion of depressives being "sadder yet wiser" was controversial when first presented, and continues to be heavily debated. Self-perception studies provide maximum external validity, but have been characterised by methodological limitations and consequently have yielded contradictory results. This study was designed to address limitations of past research. Seventy-two female participants were paired into dysphoric, nondysphoric or dysphoric - nondysphoric dyads to engage in 20-min social interactions. Thereafter, they rated their partners on social competence, as well as how they believed their partners would rate them. Accuracy was determined by comparing participants' perceptions of their conveyed impressions with actual ratings given to them by their partners. Results challenge the depressive realism hypothesis. (Contains 3 tables and 1 figure.)