The onset of psychotic symptoms later in life requires careful multidisciplinary evaluation, yet may pose significant diagnostic difficulties given current classification schema. Here we describe a patient with new onset of schizophrenia-like symptoms at age 61. Cognitive screening and laboratory tests were within normal limits. However, detailed neuropsychological studies suggested mild to moderate, diffuse cerebral dysfunction, and MR revealed an arachnoid cyst around the right sylvian fissure. Three annual follow-up evaluations demonstrated no additional cognitive deterioration. Neuropsychological findings are discussed along with limitations of current psychiatric nosology and cognitive screening tasks in older patients with new-onset psychosis.