Background: Early childhood depression is associated with anhedonia and reduced event-related potential (ERP) responses to rewarding or pleasant stimuli. Whether these neural measures are indicators of target engagement or treatment outcome is not yet known.

Methods: We measured ERP responses to win and loss feedback in a guessing task and to pleasant versus neutral pictures in young (4.0-6.9 years of age) depressed children before and after randomization to either 18 weeks of Parent-Child Interaction Therapy-Emotion Development (PCIT-ED) or waitlist.

Results: Analyses included reward positivity (RewP) data from 118 children randomly assigned to PCIT-ED (n = 60) or waitlist (n = 58) at baseline and late positive potential (LPP) data from 99 children (44 assigned to PCIT-ED vs. 55 assigned to waitlist) at baseline. Children undergoing PCIT-ED showed a greater reduction in anhedonia (F_1,103 = 10.32, p = .002, partial η² = .09). RewP reward responses increased more (F_1,86 = 5.98, p = .02, partial η² = .07) for PCIT-ED, but a greater change in RewP was not significantly associated with a greater reduction in major depressive disorder symptoms (r = -.12, p > .4). Baseline RewP did not predict treatment change. LPPs to positive pictures did not change across treatment, but greater baseline LPPs to positive pictures predicted a higher likelihood of remission from major depressive disorder in children undergoing PCIT-ED (B = 0.14; SE = 0.07; odds ratio = 1.15; p = .03).

Conclusions: The ERP reward response improved in young children with depression during a treatment designed to enhance emotion development, providing evidence of target engagement of the neural systems associated with reward. Further, greater baseline LPP responses to positive pictures was associated with a greater likelihood of depression remission, suggesting that this ERP measure can predict which children are most likely to respond to treatment.