The drug has traditionally been used as an anaesthetic for animals and, in some cases, humans – but has also established itself as a nightclub favourite in recent years, where it is nicknamed Special K.
But studies have found it can treat depression within hours, even when years of alternative treatments have failed.
And the effects of just one dose can last up to 10 days.
Most antidepressant drugs currently available on prescription need several months or even years to take effect and must be taken everyday.
However, scientists discovered that rats given ketamine stopped displaying symptoms of depressive behaviour within hours of their first fix.
The drug was even shown to restore brain-connections damaged by stress.
A similar study conducted at the Connecticut Mental Health Centre also found 70 per cent of depressed patients who failed to respond to years of treatment on traditional antidepressants improved within hours of receiving a dose of ketamine.
Professor Ronald Duman, at Yale University, discovered that ketamine progresses through the nervous system in a different way to traditional drugs.
It follows a pathway that rapidly forms new synaptic connections between neurons, a process called "synaptogenesis".
Professor Duman hailed the potential of ketamine. He said: "It's like a magic drug — one dose can work rapidly and last for seven to 10 days."
Until now, ketamine's clinical use has been limited by the fact that it has to be injected and can cause hallucinations.
But it only needs to be used in low doses for depression.
George Aghajanian, co-researcher on the study published in the journal Science also warned that the drug needed further analysis and modification before it could be approved for general use.
He said: "The pathway is the story.
"Understanding the mechanism underlying the antidepressant effect of ketamine will allow us to attack the problem at a variety of possible sites within that pathway."
Glenn Garnham, a drug and alcohol counsellor for UK charity Admit voiced concerns over the study's findings.
He said: "Ketamine is a very addictive drug which is normally used on horses. I deal with many people who are addicted to ketamine and it affects their life in the same way as any other addiction does, leading to serious problems with health, money, friends and family.
"It is already very cheap and easy to become addicted to – approving it for medical use might remove some of its stigma and lead more people down the path of addiction."
I am game to give it a shot. Pills just don't do it for me.