A central tenet of psychodynamic theory of depression is the role of avoided anger. However empirical research has not yet addressed the question of for which patients and via what pathways experiencing anger in sessions can help. The therapeutic alliance and acquisition of patient insight are important change processes in dynamic therapy and may mediate the anger-depression association. This study was embedded into a randomized trial testing the efficacy of Intensive Short-Term Dynamic Psychotherapy (ISTDP) for treatment resistant depression. In-session patient affect experiencing (AE) was coded for every available session (475/481) by blinded observers in 27 patients randomized to ISTDP. Dynamic Structural Equation Modeling was used to examine within-person associations between variation in depression scores session-by-session and both patient ratings (alliance) and observer ratings (AE and insight) of the treatment process. Alliance and insight were independent mediators of the effect of anger on next-session depression. However, the relative importance of these two indirect effects of anger on depression was conditional on pretreatment patient personality pathology (PP). In patients with higher PP, in-session anger was negatively related to depressive symptoms next session, with this effect operating through higher alliance. In patients with low PP, in-session anger was negatively related to depressive symptoms next session, with this effect operating through enhanced patient insight. These findings highlight an anger-depression mechanism of change in dynamic therapy. Depending upon patient personality, either an "insight pathway" or a "relational pathway" may promote the effectiveness of facilitating arousal and expression of patients insession feelings.