This article provides an overview of the theory, clinical application, and research data on behavioral treatment of depression in dementia patients. Behavioral theory of depression in nondemented adults indicates that decreased positive person-environment interactions initiate and maintain a cycle of depression that may be amenable to treatment. This same cycle is discussed as it appears in demented adults, and treatment is suggested. This treatment focuses on altering the aversive events and interactions that maintain patient depression, by increasing pleasant events and interactions, maximizing cognitive abilities, and teaching caregivers strategies for behavior change and effective problem solving. A 9-week clinical research protocol is provided with specific session-by-session content. Preliminary data are presented from a controlled clinical trial of this approach. Results thus far indicate that behavioral treatment is effective in reducing depression in patients with Alzheimer disease and in reducing the level of depression in their caregivers. The implications of these findings on future clinical care of patients and research directions are discussed.