Time-of-Flight (ToF) and other IR-based cameras that register depth are becoming more and more affordable in consumer electronics. This paper aims to improve a real- time hand gesture interaction system by augmenting it with a ToF camera. First, the ToF camera and the RGB camera are calibrated, and a mapping is made from the depth data to the RGB image. Then, a novel hand detection algorithm is introduced based on depth and color. This not only improves detection rates, but also allows for the hand to overlap with the face, or with hands from other persons in the background. The hand detection algorithm is evaluated in these settings, and compared to previous algorithms. Furthermore, the depth information allows us to track the position of the hand in 3D, allowing for more interesting modes of interaction. Finally, the hand gesture recognition algorithm is applied to the depth data as well, and compared to the recognition based on the RGB images. The result is a real-time hand gesture interaction system that allows for complex 3D gestures and is not disturbed by objects or persons in the background.