The incidence of dementia rises rapidly with age. Elderly people commonly have significant medical conditions that impact on cognition and functional ability. The diagnosis of dementia requires both a decline in cognition and loss of functional ability. Assessment of dementia in medical patients requires a holistic approach that encompasses the spectrum of disease from measuring impairment of specific mental abilities to evaluating handicap in the patient's normal social setting. Similarly, treatment can be aimed at any point in this spectrum. Recent licensing of new cholinesterase inhibitors for the treatment of Alzheimer's disease has introduced specific problems in the treatment of medical patients with dementia. This review provides a framework for clinicians to assess and treat dementia in medical patients and describe s a practical approach to the prescribing of cholinesterase inhibitors in patients with concomitant medical problems.