Hyperintense lesions (HL), as visualized on T2-weighted or FLAIR MRI, are a common finding in older people, but their clinical significance and influence on cognitive function remain to be clarified. We investigated the relationship between HL in deep white and gray matter structures and cognition in older subjects. We recruited 154 nondemented (Mini-Mental State Examination > 24) subjects (79 males) over the age of 70 from primary care (103 subjects with mild hypertension and 51 normotensive subjects). All subjects underwent FLAIR and proton density and T2-weighted axial 1.5-tesla MRI scans (slice thickness: 5 mm). The scans were rated for the presence and distribution of HL in the subcortical gray matter (caudate, putamen, globus pallidus, thalamus) and associated white matter tracts (internal/external capsule). Subjects (n = 149) underwent a comprehensive cognitive assessment involving tests of attention, processing speed, episodic memory, working memory, and executive function. Partial correlations (correcting for age, systolic blood pressure, and New Adult Reading Test [NART] score) were performed to investigate the relationship between cognition and white matter change. HL were found in 49% of subjects. HL in both the gray (thalamus and caudate) and white matter were significantly associated with impaired cognitive function in tasks involving processing speed and/or executive function, but showed no associations with episodic or working memory. HL in both subcortical gray matter structures and associated fiber tracts correlate with impairments in attention, executive function and processing, and memory retrieval speed in nondemented older community-dwelling subjects. Such lesions may be an important cause of age-related attentional and executive dysfunction in the elderly, as well as temporal lobe and hippocampal changes that have previously been reported to be associated with impairments to the ability to actually store and retrieve information from memory.