Cognitive and functional losses are only part of the spectrum of disability experienced by persons with Alzheimer's disease and related dementias. They also experience losses in the ability to make decisions, known as decision-making capacity. Researchers have made substantial progress in developing a model of capacity assessment that rests upon the concept of the 4 decision-making abilities: understanding, appreciation, choice and reasoning. Empirical research has increased our understanding of the effects of late-life cognitive impairment on a person's ability to make decisions. This review examines studies of the capacity to consent to treatment, research and the management of everyday functional abilities. The results illustrate the clinical phenotype of the patient who retains the capacity to consent. They also suggest that measures of capacity can improve how researchers measure the benefits of cognitive enhancements and stage dementia.