This study investigated functional communication skills in subjects with mild (n = 26) and moderate (n = 22) Alzheimer's disease (AD) and compared their performance with that of normal elderly (n = 26), Wernicke's aphasic (n = 26), and elderly depressed (n = 15) subjects. Communicative Abilities in Daily Living (CADL) (Holland, 1980), a formal test of functional communication, was administered to all subjects. Subjects with mild and moderate AD were impaired on the CADL, and the impairment was more severe in the moderately demented group than in the mildly demented group. In addition, functional language skills were impaired in elderly depressed subjects as compared with normal elderly control subjects; however, the elderly depressed subjects were less impaired than were the mild AD subjects. The depressed subjects responded incompletely rather than in the irrelevant, vague, rambling style that characterized the AD subjects. Finally, although performance of the moderate AD and Wernicke's aphasic subjects did not differ in terms of total CADL score, the performance of these groups across pragmatic categories and types of error responses were markedly different.