We reviewed 27 published studies examining a possible association between sensory (visual or hearing) impairment and late-life psychosis with paranoid features. A majority of these investigations supported the postulated association between hearing impairment and late-onset schizophrenia or paranoid disorder. Many of the published studies, however, had important methodological limitations. In a case-control study, we assessed visual and hearing impairments in 87 middle-aged and elderly subjects (16 with late-onset schizophrenia, 25 with early-onset schizophrenia, 20 with mood disorder, and 26 normal comparison subjects). Visual and hearing impairments were assessed in a blind manner by means of standardized quantitative assessments. Compared with normal subjects, both of the schizophrenia groups and the mood disorder group had greater impairment in most variables of corrected visual acuity and in self-reported hearing deficit, but not in uncorrected (constitutional) visual acuity or on pure-tone audiometry. Our results suggest that the observed relationship between sensory impairment and late-life psychosis may be due, at least in part, to a suboptimal correction of sensory deficits in older psychiatric patients.