Depression is one of the most prevalent mental disorders in older adults and leads to considerable decreases in health, well-being, and impaired functioning. Intervention studies have focused on the effects on symptomatic recovery, and most do not include functional recovery as an outcome. Reduction of functional limitations as a treatment goal in old-age psychiatry aligns with the values of older persons. The objective of this review was therefore to evaluate the effectiveness of late-life depression interventions on functional limitations. This systematic review identified 15 randomized controlled trials in which the effectiveness of different interventions on functional limitations was evaluated in patients with late-life depression. The interventions were categorized into four categories: psychological interventions, drug treatment, physical exercise, and collaborative care. Multicomponent and collaborative-care interventions appear to be the most promising for improvement of functional limitations, particularly in primary care and community-dwelling populations of older persons with symptoms of depression. There is, however, a lack of evidence regarding studies in specialized mental health care.