Major depressive disorder (MDD) is a severe disease of unknown pathogenesis with a lifetime prevalence of ~10%. Therapy requires prolonged treatment that often fails. We have previously demonstrated that ceramide levels in the blood plasma of patients and in mice with experimental MDD are increased. Neutralization of blood plasma ceramide prevented experimental MDD in mice. Mechanistically, we demonstrated that blood plasma ceramide accumulated in endothelial cells of the hippocampus, inhibited phospholipase D (PLD) and thereby decreased phosphatidic acid in the hippocampus. Here, we demonstrate that phosphatidic acid binds to and controls the activity of phosphotyrosine phosphatase (PTP1B) in the hippocampus and thus determines tyrosine phosphorylation of a variety of cellular proteins including TrkB. Injection of PLD, phosphatidic acid, or inhibition of PTP1B abrogated MDD and normalized cellular tyrosine phosphorylation, including phosphorylation of TrkB and neurogenesis in the hippocampus. Most importantly, these treatments also rapidly normalized behavior of mice with experimental MDD. Since phosphatidic acid binds to and inhibits PTP1B, the lack of phosphatidic acid results in increased activity of PTP1B and thereby in reduced tyrosine phosphorylation of TrkB and other cellular proteins. Thus, our data indicate a novel pathogenetic mechanism of and a rapidly acting targeted treatment for MDD.