Dementia with Lewy bodies (DLB) accounts for 15-20% of all autopsy confirmed dementias in old age. Characteristic histopathological changes are intracellular Lewy bodies and Lewy neurites, with abundant senile plaques but sparse neurofibrillary tangles. Core clinical features are fluctuating cognitive impairment, persistent visual hallucinations and extrapyramidal motor symptoms (parkinsonism). One of these core features has to be present for a diagnosis of possible DLB, and two for probable DLB. Supportive features are repeated falls, syncope, transient loss of consciousness, neuroleptic sensitivity, delusions and hallucinations in other modalities. DLB is clinically under-diagnosed and frequently misclassified as systemic delirium or dementia due to Alzheimer's disease or cerebrovascular disease. Therapeutic approaches to DLB can pose difficult dilemmas in pharmacological management. Neuroleptic medication is relatively contraindicated because some patients show severe neuroleptic sensitivity, which is associated with increased morbidity and mortality. Antiparkinsonian medication has the potential to exacerbate psychotic symptoms and may be relatively ineffective at relieving extrapyramidal motor symptoms. Recently there is converging evidence that treatment with cholinesterase inhibitors can offer a safe alternative for the symptomatic treatment of cognitive and neuropsychiatric features in DLB. This review will focus on the clinical characteristics of DLB, its differential diagnosis and on possible management strategies.