Background: A growing body of empirical evidence indicates that low-level social capital is related to poor mental health outcomes. However, the prospective association between social capital and depression remains unclear, and no published studies have investigated the association with longitudinal data in East-Asian countries. Methods: We analyzed data from the ongoing Korean Welfare Panel Study to prospectively investigate association between social capital and depression. Social capital was measured at the individual level by two items specific to interpersonal trust and reciprocity. Depression was annually assessed as a dichotomous variable using the Center for Epidemiologic Studies Depression Scale. After excluding participants who had depression in 2006, logistic regression models were applied to estimate the association between each social capital indicator and new-onset depression developed in 2007 or long-term depression in both 2007 and 2008. We also examined the association in a subpopulation restricted to healthy participants after excluding individuals with any pre-existing disability, chronic disease, or poor self-rated health condition. Results: Compared to the high interpersonal trust group, the odds ratios of developing new-onset and long-term depression among the low interpersonal trust group were 1.22 (95% CI: 1.08 similar to 1.38) and 1.23 (95% CI: 1.03 similar to 1.50), respectively, and increased to 1.32 (95% CI: 1.10 similar to 1.57) and 1.47 (95% CI: 1.05 similar to 2.08) in the subpopulation analyses restricted to healthy individuals. Although the low and intermediate reciprocity group also had significantly higher odds of developing new-onset depression compared to the high reciprocity group, the effects were attenuated and statistically non-significant in the subpopulation analyses. Conclusion: Low interpersonal trust appears to be an independent risk factor for new-onset and long-term depression in South Korea.