It is well recognised that patients with Parkinson's disease exhibit cognitive deficits, even in the earliest disease stages. Whereas, L-DOPA therapy in early Parkinson's disease is accepted to improve the motor symptoms, the effects on cognitive performance are more complex: both positive and negative effects have been observed. The purpose of the present article is to review the effects of L-DOPA medication in Parkinson's disease on cognitive functions in the broad domains of cognitive flexibility and working memory. The review places the effects in Parkinson's disease within a framework of evidence from studies with healthy human volunteers, rodents and non-human primates as well as computational modeling work. It is suggested that beneficial or detrimental effects of L-DOPA are observed depending on task demands and basal dopamine levels in distinct parts of the striatum. The study of the beneficial and detrimental cognitive effects of L-DOPA in Parkinson's disease has substantial implications for the understanding and treatment development of cognitive abnormalities in Parkinson's disease as well as normal health.