Aims: The purpose of the present study was to probe sensitivity to potentially misleading negative feedback on cognitive tasks as a possible mechanism of cognitive impairment in elderly patients with mild depression. Methods: A total of 22 mildly depressed elderly subjects were compared to 22 healthy controls, using a computerized Tower-of-London task. Results: Failure and magnitude of failure were significantly worse after negative but not positive feedback. Depression predicted failure after negative feedback but not the magnitude of failure. Neither failure nor magnitude of failure increased as a consequence of repeated negative feedback. Conclusions: Altered sensitivity to negative feedback occurs in mild late-life unipolar depression and may represent a subtle context-specific phenomenon.