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India is fast developing country. The elderly population is large and increasing due to development of health care facilities. Elderly people are facing physical, psychological and health issues due to economic impairment, urbanization, modernization. Globalizations have brought lifestyle changes which resulted in disintegration of joint family system and alternative living arrangements for elderly have come forward. Living in old age homes is becoming an option for elderly. This study is an attempt to find out the mean difference between depression and psychological well being among institutionalized and non- institutionalized elderly. To realize the objectives and to test the hypotheses formulated, two tools were used to assess depression and psychological wellbeing The Geriatric depression Inventory (Holroyd & Clayton, 2000), and Psychological Wellbeing Scale (Bhogley & Prakash, 1995), were used on elderly population. For purposes of the present study, a total sample of 60 were taken out of which 30 were ( 60+ years )  elderly people  from old age homes and 30 were  (60+ y ears) from non- institutionalized elderly from Tirupati in Chittoor district ,Andhra Pradesh. ‘t’-test was applied to check the difference of depression and psychological well being and the Karl-person ‘r’ method used to check the correlation. Result revealed significant differences in depression and psychological well being with respect to institutionalized and non- institutionalized elderly. While co-relation between depression and psychological well-being reveals -0.68, negative correlation.