The lateral habenula (LHb) is a key brain region implicated in the pathology of major depressive disorder (MDD). Specifically, excitatory LHb neurons are known to be hyperactive in MDD, thus resulting in a greater excitatory output mainly to downstream inhibitory neurons in the rostromedial tegmental nucleus. This likely results in suppression of downstream dopaminergic ventral tegmental area neurons, therefore, resulting in an overall reduction in reward signalling. In line with this, increasing evidence implicates aberrant inhibitory signalling onto LHb neurons as a co-causative factor in MDD, likely as a result of disinhibition of excitatory neurons. Consistently, growing evidence now suggests that normalising inhibitory signalling within the LHb may be a potential therapeutic strategy for MDD. Despite these recent advances, however, the exact pharmacological and neural circuit mechanisms which control inhibitory signalling within the LHb are still incompletely understood. Thus, in this review article, we aim to provide an up-to-date summary of the current state of knowledge of the mechanisms by which inhibitory signalling is processed within the LHb, with a view of exploring how this may be targeted as a future therapy for MDD.