Lewy body dementia (LBD) is the second most common dementia after Alzheimer's disease (AD). LBD is characterized clinically by visual hallucinations, extrapyramidal symptoms, cognitive fluctuations and neuroleptic sensitivity. LBD and AD share many common features in pathology, genetics and biochemical alterations; however, correct clinical distinction between these disorders has prognostic and therapeutic implications. There are currently no definitive radiological or biological markers for LBD, but studies suggest that premorbid differences in cognitive domains and personality traits, differences in clinical presentation, and alterations in autonomic function and sleep may improve diagnosis. Cholinergic dysfunction plays a major role in both AD and LBD; however, dysfunction is greater in LBD. This may account for the more prominent hallucinations, and offers the possibility of a greater response to cholinesterase inhibitors in LBD. The treatment of LBD is symptomatic and is based on a limited number of clinical trials and extension of results from trials in AD. Current research is focused on the role of synuclein aggregation with possible roles for synuclein-derived peptides as aggregation inhibitors. Other approaches target amyloid, neuroinflammation, oxidative injury, proteolysis, lipid peroxidation and immunotherapies with variable results. Improved understanding of disease mechanisms may open new therapeutic avenues for LBD in the future.