Upon binding of cortisol, the glucocorticoid receptor (GR) regulates the transcription of specific target genes, including those that encode the stress hormones corticotropin-releasing hormone (CRH) and adrenocorticotropic hormone (ACTH). Dysregulation of the stress axis is a hallmark of major depression in human patients. However, it is still unclear how glucocorticoid signaling is linked to affective disorders. We identified an adult-viable zebrafish mutant in which the negative feedback on the stress response is disrupted, due to abolition of all transcriptional activity of GR. As a consequence, cortisol is elevated, but unable to signal through GR. When placed into an unfamiliar aquarium (‘novel tank’), mutant fish become immobile (‘freeze’), show reduced exploratory behavior and do not habituate to this stressor upon repeated exposure. Addition of the antidepressant fluoxetine to the holding water and social interactions restore normal behavior, followed by a delayed correction of cortisol levels. Fluoxetine does not affect overall transcription of CRH, the mineralocorticoid receptor (MR), the serotonin transporter Serta or GR itself. Fluoxetine, however, suppresses the stress-induced upregulation of MR and Serta in both wildtype fish and mutants. Our studies show a conserved, protective function of glucocorticoid signaling in the regulation of emotional behavior and reveal novel molecular aspects of how chronic stress impacts vertebrate brain physiology and behavior. Importantly, the zebrafish model opens up the possibility of high-throughput drug screens in search of new classes of antidepressants.