The present invention provides aqueous oral formulations containing sertraline, or a pharmaceutically acceptable salt thereof, and a sulfoalkyl ether cyclodextrin. The liquid formulations are pleasant tasting, convenient to use, and chemically and physically stable. The liquid formulations can be administered directly or diluted before administration. Unlike the commercially available ZOLOFTTM formulation, the liquid formulations herein do not precipitate upon dilution with water, fruit juices, sodas or other pharmaceutically acceptable oral liquid carriers. The sulfoalkyl ether cyclodextrin-containing formulation provides significant advantages over the marketed non-aqueous formulation and other cyclodextrin-containing formulations of sertraline. The formulation can be self-preserved against microbial growth. The SAE-CD-containing formulation of sertraline can be provided in liquid form or as a reconstitutable powder. Both ready-to-use and concentrated liquid formulations can be prepared. The formulation is available as a clear solution or a suspension.