The differential diagnosis between Alzheimer's disease (AD) and major depression (MD) in the elderly can be problematic because the cognitive profile of the two conditions overlaps. Associative learning tasks seem to separate AD from MD. However, they are sensitive to the effects of normal ageing. Short-term memory-binding tasks have proved insensitive to the effects of normal ageing and highly sensitive to AD. However, they have not been used to differentiate AD from MD. The present study was aimed at investigating visual short-term memory binding in AD and MD. Fourteen AD patients, 14 patients with MD, and 14 healthy older adults were asked to perform a visual short-term memory binding task that investigated the retention of shapes, colors, or combinations of shapes and colors. Participants were to recognize changes occurring between two consecutive displays either in a single dimension (i.e., shape or color only) or in two dimensions (i.e., shape-color binding). Short-term memory performance for shape or color only was equivalent across groups. The only significant effect found was in short-term memory for shape-color binding and this was due to AD patients performing poorly in this condition only. The results extend previous findings in AD to visual short-term memory and suggest that the specific impairment in binding information in memory differentiates between the performance of AD and patients with MD.