The use of Ketamine to treat depression was formally investigated in a 2006 report for JAMA Psychiatry. A team based at the US National Institute of Mental Health (NIMH) in Bethesda, Maryland, found that :
“Robust and rapid antidepressant effects resulted from a single intravenous dose of an N-methyl-D-aspartate antagonist; onset occurred within 2 hours postinfusion and continued to remain significant for 1 week.”
“To our knowledge, there has never been a report of any other drug or somatic treatment (ie, sleep deprivation, thyrotropin-releasing hormone, antidepressant, dexamethasone, or electroconvulsive therapy) that results in such a dramatic rapid and prolonged response with a single administration.”
The mechanism of its action, however, is still unclear.
A new (2017) study, covered in Nature suggests that a previous theory (that it inhibits the brain's NMDA-receptors) may be incorrect.
“Their finding adds to recent studies contradicting a long-held idea that the drug works mainly by blocking proteins called NMDA receptors, on the surface of brain cells, which transmit signals between those cells.”
Note that a third (also as yet unproven) theory instead suggests that breakdown chemicals of the drug - rather than the drug itself - may be responsible for its anti-depressant effects.
Update Oct 2018 : “Johnson & Johnson has submitted its esketamine for regulatory approval, but researchers still don't understand how the fast-acting antidepressant lifts moods.” Nature Reviews Drug Discovery volume 17, pages 773–775