A population-based study of 1810 persons, aged 75+, was investigated to evaluate the role of dementia and other chronic diseases as determinants of institutionalization in the elderly. The study population was examined at baseline and after a 3-year interval. After adjustment for sociodemographic characteristics, functional dependence, dementia, cerebrovascular disease and hip fracture were associated with living in an institution at baseline. Additionally, functional dependence, hip fracture and dementia were also associated with moving to an institution during the 3-year follow-up. In a similar analysis, including only nondemented subjects, the Mini-Mental State Examination emerged as one of the strongest determinants. The population attributable risk percentage of institutionalization during the 3-year follow-up due to dementia was 61%. This study confirms that dementia and cognitive impairment are the main contributors to institutionalization in the elderly, independently of their sociodemographic status, social network, or functional status.