Given the relationship between the presence of ApoE epsilon 4 and Alzheimer's disease (AD), were studied whether knowledge of epsilon 4 status would predict which memory-impaired patients would develop AD over time. One hundred seven patients who presented with memory impairment but not dementia were referred to the study by their family physicians. These patients were followed prospectively over a 2-year period. Twenty-nine patients developed AD, while 78 did not develop dementia. We found that ApoE genotype was a reliable prognostic indicator of who developed AD in this group only when memory test performance was included in the predictive model. These findings indicate that limitations of ApoE genotyping in isolation as a prognostic indicator of AD. Because this study included prospectively selected patients who were followed longitudinally, our findings are likely to have more relevance in the clinical setting than those obtained from currently available retrospective studies.