Vascular dementia (VAD) is common, and small vessel disease is one of the most frequent etiologies of the disorder. Lacunar state and Binswanger's disease are the two types of VAD associated with small vessel disease. Lacunar state and Binswanger's disease produce a dementia syndrome with characteristics of subcortical dementia including slowing of information processing, impaired memory, and poor sustained attention. Executive dysfunction includes poor word list generation and verbal fluency (design generation), impaired motor programming with perseveration and impersistence, and difficulty with set shifting. Memory loss in subcortical VAD is characterized by poor retrieval and intact recognition. Apathy is ubiquitous in VAD and depression and psychosis are common. Parkinsonism with prominent gait disturbances in conjunction with pyramidal tract signs, dysarthria, pseudobulbar affect, and incontinence are frequent motor manifestations of VAD with small vessel disease. The lesions of subcortical VAD affect the structures--caudate nucleus, globus pallidus, thalamus-and connecting fibers of frontal--subcortical circuits and produce a clinical syndrome similar to that seen in other subcortical diseases.