Past research has shown that social rejection predicts a wide range of psychological problems, including the development of depression, anxiety, and aggressive behavior. In addition, rejection by others appears to maintain and exacerbate depressive symptoms for depressed individuals. Laboratory studies examining self-reports of negative affect and distress following social rejection, however, have reported inconsistent results. Furthermore, the mechanisms by which social rejection by peers causes depression and other psychological problems are currently unknown. This study therefore measured salivary cortisol before and after a social rejection/acceptance manipulation to objectively assess the psychological distress experienced subsequent to peer rejection. Specifically, this research aimed to 1) establish if salivary cortisol was elevated significantly in response to social rejection, and 2) ascertain if individual factors, such as gender, current depressive symptoms, defensiveness, self-esteem, self-enhancement, rejection sensitivity, the coping strategy employed following social rejection, social anxiety, fear of negative evaluation, and perceived belonging, moderated the relationship between social rejection and salivary cortisol. Results indicated that socially rejected participants exhibited significantly higher salivary cortisol concentrations than socially accepted and control participants following the social rejection/acceptance manipulation. Consistent with these results, rejected participants also reported significantly more negative and less positive affect than accepted and control participants immediately after the social rejection/acceptance manipulation. Defensiveness (or social desirability) moderated the relationship between social rejection and salivary cortisol, where rejected participants high in defensiveness/social desirability exhibited significantly lower salivary cortisol than rejected participants low in defensiveness/social desirability subsequent to the social rejection/acceptance manipulation. Defensiveness/social desirability did not, however, predict self-reported positive or negative affect following peer rejection. Self-reported depressive symptoms did not moderate the relationship between social rejection and salivary cortisol, but did interact with group assignment in predicting self-reported negative affect after peer rejection. This paper discusses the importance of these findings and future research directions.