Major depressive disorder (MDD) represents a grand challenge to human health and society, but the underlying pathophysiological mechanisms remain elusive. Previous neuroimaging studies have suggested that MDD is associated with abnormal interactions and dynamics in two major neural systems including the default mode - salience (DMN-SAL) network and the executive - limbic (EXE-LIM) network, but it is not clear which network plays a central role and which network plays a subordinate role in MDD pathophysiology. To address this question, we refined a newly developed Multiscale Neural Model Inversion (MNMI) framework and applied it to test whether MDD is more affected by impaired circuit interactions in the DMN-SAL network or the EXE-LIM network. The model estimates the directed connection strengths between different neural populations both within and between brain regions based on resting-state fMRI data collected from normal healthy subjects and patients with MDD. Results show that MDD is primarily characterized by abnormal circuit interactions in the EXE-LIM network rather than the DMN-SAL network. Specifically, we observe reduced frontoparietal effective connectivity that potentially contributes to hypoactivity in the dorsolateral prefrontal cortex (dlPFC), and decreased intrinsic inhibition combined with increased excitation from the superior parietal cortex (SPC) that potentially lead to amygdala hyperactivity, together resulting in activation imbalance in the PFC-amygdala circuit that pervades in MDD. Moreover, the model reveals reduced PFC-to-hippocampus excitation but decreased SPC-to-thalamus inhibition in MDD population that potentially lead to hypoactivity in the hippocampus and hyperactivity in the thalamus, consistent with previous experimental data. Overall, our findings provide strong support for the long-standing limbic-cortical dysregulation model in major depression but also offer novel insights into the multiscale pathophysiology of this debilitating disease. © 2021 The Authors