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Background: Subthreshold Depression (SD) is an impairing condition that might convert into Major Depressive Disorder (MDD). Still, the characteristics of childhood SD are largely unknown. Purpose: We aim to examine how SD in children differs from MDD regarding symptom profile, comorbidity, functional impairment and associated life stressors. We will examine the frequency of childhood SD and MDD and compare previous mental health between groups. Basic procedures: This is a two-phase nested case–control study within the Danish National Birth Cohort (DNBC) (N = 4500). Mothers completed the online Development and Well-Being Assessment (DAWBA) regarding their child aged 8–10 years. Main findings: A total of 3421 children participated (response rate 76%); 35 children were diagnosed with MDD and 55 with SD. Anhedonia, irritability and worthlessness/guilt were more frequent in MDD than SD, and anhedonia was rare in non-depressed children (1.2%).Comorbid anxiety and conduct disorders were equally common in the groups. Children with MDD had higher functional impairment caused by the depressive condition than children with SD, but overall functional impairment was the same.Life stressors, including maternal depressive symptoms, were equally frequent for children with MDD and SD. Emotional problems and functional impairment at age 7 years predicted later SD and MDD. SD was twice as common as MDD in the DNBC (point prevalence 1.0% vs. 0.5%). Principal conclusions: Children with SD and MDD display striking similarities. They differ mainly by the number of depressive symptoms and depression-related functional impairment.Both SD and MDD at age 8–10 years were preceded by emotional symptoms and functional impairment at age seven years. This indicates a continuity of childhood depressive conditions but also a window of opportunity for prevention of MDD.