Objective: While mood instability is strongly linked to depression, its ramifications remain unexplored. In patients diagnosed with unipolar depression (UD), our objective was to investigate the association between mood instability, calculated based on daily smartphone-based patient-reported data on mood, and functioning, quality of life, perceived stress, empowerment, rumination, recovery, worrying and wellbeing. Methods: Patients with UD completed daily smartphone-based self-assessments of mood for 6 months, making it possible to calculate mood instability using the Root Mean Squared Successive Difference (rMSSD) method. A total of 59 patients with UD were included. Data were analyzed using mixed effects regression models. Results: There was a statistically significant association between increased mood instability and increased perceived stress (adjusted model: B: 0.010, 95% CI: 0.00027; 0.021, p = 0.044), and worrying (adjusted model: B: 0.0060, 95% CI: 0.000016; 0.012, p = 0.049), and decreased quality of life (adjusted model: B: −0.0056, 95% CI: −0.011; −0.00028, p = 0.039), recovery (adjusted model: B: −0.032, 95% CI: −0.0059; −0.00053, p = 0.019) and wellbeing. There were no statistically significant associations between mood instability and functioning, empowerment, and rumination (p’s >0.09). Conclusion: These findings underscore the significant influence of mood instability on patients’ daily lives. Identification of mood fluctuations offer potential insights into the trajectory of the illness in these individuals.