Counterfactual information, or the mental representation of alternative outcomes, plays a critical role in value-based decision-making by allowing individuals to evaluate both chosen and unchosen options. Aberrant counterfactual processing is linked to psychiatric disorders like major depressive disorder (MDD). While the neural encoding of counterfactual outcomes is established, the mechanisms by which this feedback affects future decision-making are less clear. Using human intracranial electrophysiology, we show that counterfactual feedback influences subsequent choice behavior through beta oscillations in the anterior insula, with this effect being more pronounced in individuals with depression. Figure 1 highlights that patients with MDD exhibit heightened sensitivity to counterfactual prediction errors (CPEs), leading to slower reaction times after unfavorable feedback. Reaction times were significantly modulated by CPEs, particularly in individuals with higher depression severity, indicating that depressive symptoms may enhance counterfactual sensitivity. In Figure 2, we show that beta power (13-30Hz) in the frontal, insular, and cingulate cortices encodes CPEs. Patients without depression exhibit a positive correlation between beta power and CPE magnitude, whereas this relationship is diminished in patients with depression, especially in the anterior insula (aINS), orbitofrontal cortex (OFC), anterior cingulate cortex (ACC), and dorsolateral prefrontal cortex (dlPFC). These results suggest that beta oscillations in these regions are key in counterfactual feedback processing, with depression disrupting this encoding. Figure 3 demonstrates that the connectivity between key regions involved in decision-making, such as the aINS, OFC, and dlPFC, is altered in depression. Depressed patients show blunted beta coherence between these regions, particularly between the aINS-dlPFC and aINS-OFC, suggesting disrupted network-level processing of counterfactual feedback in MDD. These findings suggest that impaired beta oscillatory activity and disrupted network coherence underlie maladaptive decision-making seen in depression.