Previous magnetic resonance spectroscopy (MRS) studies have shown increased myo-inositol (MI) and decreased N-acetyl aspartate (NAA) levels in the parieto-occipital lobes of patients with Alzheimer's disease (AD) compared to those with other dementias and normal subjects. This study aimed to establish the quantitative relationship between metabolite ratios and degree of cognitive impairment in patients with mild to moderate AD and sub-cortical ischaemic vascular dementia (SIVD). Forty-four older people with clinical dementia were recruited from a memory clinic and followed up for 2.0-3.5 years; 20 cases were finally classified as probable AD, 18 as SIVD and 6 as mixed type. Mini Mental State Examination (MMSE) and short echo time single voxel automated MRS from the mesial parieto-occipital lobes were performed at the time of initial referral. Spearman rank correlation coefficients were calculated for MMSE scores and measured metabolite ratios MI/Cr, NAA/Cr, Cho/Cr and NAA/MI. The AD group showed a significant correlation between MMSE and NAA/MI (r=0.54, P=0.014) and NAA/Cr (r=0.48, P=0.033), and a negative, non-significant association with MI/Cr (r=-0.41, P=0.072). MI/Cr was negatively correlated with NAA/Cr (r=-0.51, P=0.021). Neither Cho/Cr ratios nor age correlated with cognitive function. The SIVD group showed no correlation between any of the measured metabolite ratios and MMSE score. This study reinforces the specific association between reduced NAA and increased MI levels in the parieto-occipital region and cognitive impairment in AD. MRS may have a role in evaluating disease progression and therapeutic monitoring in AD, as new treatments become available.