Depression is a more disabling condition than angina, arthritis, asthma and diabetes, World Health Organization research shows.
Depression is a common condition
And those with depression plus a chronic illness, such as diabetes, fare particularly badly, the study of more than 245,000 people suggests.
Better treatment for depression would improve people's overall health, the researchers concluded in the Lancet.
Experts called for better funding for mental health services.
Dr Somnath Chatterji and colleagues asked people from 60 countries taking part in the World Health Survey a variety of questions about their health, such as how they sleep, how much pain they have, and whether they have any problems with memory or concentration.
Participants were also asked about how they manage with day-to-day tasks.
After taking into account factors such as poverty and other health conditions, the researchers found that depression had the largest effect on worsening health.
And people with depression who also had one or more chronic diseases had the worst health scores of all the diseases looked at or combinations of diseases.
Dr Somnath Chatterji said: "The co-morbid state of depression incrementally worsens health compared with depression alone, with any of the chronic diseases alone, and with any combination of chronic diseases without depression.
"These results indicate the urgency of addressing depression as a public health priority to reduce disease burden and disability, and to improve the overall health of populations."
The team called on doctors around the world to be more alert in the diagnosis and treatment of the condition, noting that it is fairly easy to recognise and treat.
Marcus Roberts, head of policy at mental health charity Mind, said the impact of depression could be devastating on relationships, finances and physical health.
"The treatment of depression must be given equal footing to the treatment of other conditions.
"While treatments for most physical health problems are readily accessible, mental health treatments such as talking therapies are limited, with some patients waiting months or even years for their first appointment with a therapist."
He added that mental health was often overlooked in those with chronic health problems, as doctors focused on the physical symptoms.
'Vast sea of misery'
A spokesperson for the Department of Health said: "Seven million adults in England suffer from a common mental health problem such as anxiety, eating disorders and depression.
"We recognise that many of those with depression do not receive treatment at the moment, partly because they do not seek appropriate help.
"The government is committed to providing greater choice and access to timely and appropriate treatment options and is currently working to expand access to and choice of talking therapies in the NHS."
Marjorie Wallace, chief executive of the mental health charity SANE, said: "We now have yet more evidence, as if it were needed, of the destructive and life-threatening effects of depression, which this global study shows can be an even greater danger than many chronic physical conditions.
"Yet even in developed countries like our own, proper diagnosis and appropriate treatment can be patchy at best.
"A vast sea of misery could be avoided if this condition received the same attention and resources as Aids or cancer."
Lynn Mitchell, who has terminal lung condition, chronic obstructive lung disease, reached rock bottom two years ago with her depression.
And although she had always received quick treatment for her lung problems on the NHS she struggled to get help for her mental illness.
Now she is on antidepressants and feels a different woman.
"I think if I hadn't had help with my mental attitude I would have been dead.
"My life was so bad and so bleak it was just horrendous really. I didn't want to live but now I don't want to die."