A methodology is presented for following a cohort of older depressed patients to examine neurocognitive outcomes of depression. A total of 265 depressed individuals and 138 healthy, nondepressed controls age 60 and older who completed at least 1 year of follow-up data underwent periodic clinical evaluation by a geriatric psychiatrist. A subset of 141 patients and 137 controls had neuropsychological testing. A consensus panel of experts reviewed 63 depressed subjects with suspected cognitive impairment. Twenty-seven individuals in the depressed group were assigned diagnoses of dementia, including 11 with Alzheimer's disease, 8 with vascular dementia, and 8 with dementia of undetermined etiology. In addition, 25 individuals had other forms of cognitive impairment, and 11 were considered cognitively normal. Among elderly controls, 2 developed substantial cognitive impairment with clinical diagnoses of dementia. Among the depressed group, the incidence rates for dementia for this age are much higher than would be expected. These results are consistent with prior evidence linking depression and later dementia. Future studies are needed to examine neuroimaging and genetic, clinical, and social predictors of neurocognitive decline in depression.