Parkinson's disease is a neurodegenerative disorder causing not only motor dysfunction but also cognitive, psychiatric, autonomic and sensory disturbances. Symptoms of dementia and psychosis are common: longitudinal studies suggest that up to 75% of patients with Parkinson's disease may eventually develop dementia, and the prevalence of hallucinations ranges from 16-17% in population-based surveys to 30-40% in hospital-based series. These cognitive and behavioural features are important in terms of prognosis, nursing home placement and mortality. The pattern of cognitive deficits in Parkinson's disease is variable, but often includes executive impairment similar to that seen in patients with frontal lesions, as well as episodic memory impairment, visuospatial dysfunction and impaired verbal fluency. The most common manifestation of psychosis in Parkinson's disease is visual hallucinations, but delusions, paranoid beliefs, agitation and florid psychosis can also occur. An understanding of the pathophysiology underlying these symptoms is essential to the development of targeted therapeutic strategies. Post-mortem studies suggest an association between Lewy body deposition and dementia in Parkinson's disease, and indeed Parkinson's disease and dementia with Lewy bodies may form part of the same disease spectrum. Whether Lewy bodies actually play a causative role in cognitive dysfunction, however, is unknown. Deficits in neurotransmitter systems provide more obvious therapeutic targets and dysfunction of dopaminergic, cholinergic, noradrenergic and serotonergic systems have all been implicated; these may each underlie different features of Parkinson's disease dementia, perhaps explaining some of the heterogeneity of the syndrome. Psychosis has traditionally been considered as a dopaminergic drug-induced phenomenon, but factors intrinsic to the disease process itself also cause hallucinations and delusions. These factors may include Lewy body deposition in the limbic system, cholinergic deficits and impairments of primary visual processing. Therapeutic intervention for cognitive and behavioural symptoms in Parkinson's disease currently focuses on two main groups of drugs: cholinesterase inhibitors and atypical antipsychotics. A recent large, randomised, controlled trial suggests that cholinesterase inhibitors can produce a modest improvement in cognitive function, as well as psychotic symptoms, generally without an adverse effect on motor function. Certain atypical antipsychotics allow hallucinations, delusions and behavioural problems to be brought under control with minimal deleterious effects on motor function and cognition, but their safety in elderly patients has recently been called into question. Deep brain stimulation does not appear to be a useful treatment for cognitive and psychiatric dysfunction in patients with Parkinson's disease. Modafinil improves alertness in Parkinson's disease and warrants further investigation to establish its effects on cognitive performance.