The International Classification of Diseases (10th Version) categorizes major depressive disorder (MDD) according to severity. Guidelines provide recommendations for the treatment of MDD according to severity. Aim of this study was to assess real-life utilization of psychotropic drugs based on severity of MDD in psychiatric inpatients. Drug utilization data from the program “Drug Safety in Psychiatry” (German: Arzneimittelsicherheit in der Psychiatrie, AMSP) were analyzed according to the severity of MDD. From 2001 to 2017, 43,868 psychiatric inpatients with MDD were treated in participating hospitals. Most patients were treated with ≥ 1 antidepressant drug (ADD; 85.8% of patients with moderate MDD, 89.8% of patients with severe MDD, and 87.9% of patients with psychotic MDD). More severely depressed patients were more often treated with selective serotonin–norepinephrine reuptake inhibitors and mirtazapine and less often with selective serotonin reuptake inhibitors (p < 0.001 each). Use of antipsychotic drugs (APDs), especially second-generation APDs, increased significantly with severity (37.0%, 47.9%, 84.1%; p < 0.001 each). APD + ADD was the most used combination (32.8%, 43.6%, 74.4%), followed by two ADDs (26.3%, 29.3%, 24.9%). Use of lithium was minimal (3.3%, 6.1% ,7.1%). The number of psychotropic drugs increased with severity of MDD—patients with psychotic MDD had the highest utilization of psychotropic drugs (93.4%, 96.5%, 98.7%; p < 0.001). ADD monotherapy was observed to a lesser extent, even in patients with non-severe MDD (23.2%, 17.1%, 4.4%). Findings reveal substantial discrepancies between guideline recommendations and real-life drug utilization, indicating that guidelines may insufficiently consider clinical needs within the psychiatric inpatient setting.