Background: The most common geriatric psychiatric disorder is depression. The role of family systems in depression among the elderly has not been studied extensively. It has been suggested that urbanization promotes nucleation of family systems and a decrease in care and support for the elderly. We conducted this study in Karachi, a large urban city of Pakistan, to determine the relationship between the type of family system and depression. We also determined the prevalence of depression in the elderly, as well as correlation of depression with other important socio-demographic variables. Methods: A cross-sectional study was carried out in the premises of a tertiary care hospital in Karachi, Pakistan. Questionnaire based interviews were conducted among the elderly people visiting the hospital. Depression was assessed using the 15-item Geriatric Depression Scale. Results: Four hundred subjects aged 65 and above were interviewed. The age of majority of the subjects ranged from 65 to 74 years. Seventy eight percent of the subjects were male. The prevalence of depression was found to be 19.8%. Multiple logistic regression analysis revealed that the following were significant (p < 0.05) independent predictors of depression: nuclear family system, female sex, being single or divorced/widowed, unemployment and having a low level of education. The elderly living in a nuclear family system were 4.3 times more likely to suffer from depression than those living in a joint family system (AOR = 4.3 [95% CI = 2.4-7.6]). Conclusion: The present study found that residing in a nuclear family system is a strong independent predictor of depression in the elderly. The prevalence of depression in the elderly population in our study was moderately high and a cause of concern. The transition in family systems towards nucleation may have a major deleterious effect on the physical and mental health of the elderly.