We longitudinally evaluated the neuropsychological functions, rate of progression, and waking EEG findings in 17 patients with probable Alzheimer's disease (AD) with delusions and hallucinations, and compared them with those of matched AD patients without delusions and hallucinations. AD patients with delusions and hallucinations had a more rapid rate of decline, as measured by the Mini-Mental State Examination, a specific defect in receptive language, and a greater frequency of aggression and hostility. Visual EEG analysis showed that these patients had a significantly greater proportion of moderately abnormal EEGs, and spectral analysis confirmed the increased amount of delta and theta activity. These data demonstrate that AD patients with delusions and hallucinations have a greater degree of cerebral dysfunction and a relatively focal neuropsychological defect, which may indicate a localized pathologic abnormality.