Disentangling depression from dementia remains one of the most difficult clinical challenges for psychiatrists caring for older adults. The relationship between geriatric depression and dementia is complex for several reasons. First, cognitive impairment is often a prominent feature of depression in the elderly. Cognition may improve with successful treatment of depression but it may not normalize. Indeed, marked memory impairment in older depressed individuals may indicate a prodromal state of dementia. This review will examine issues related to depression and cognitive disorder in the elderly. The author will provide an evidence-based approach to separate mood disorder from cognitive disorder among older adults.