This longitudinal 2-year study compared self and family members' reports of physical and functional health among 40 patients with Alzheimer's disease and 53 age-matched nondemented healthy older persons. Functional health was consistently rated as more impaired by family caregivers of demented patients than by the patients themselves, a discrepancy not observed in the cognitively intact comparison group. Caregiver reports correlated significantly with declines in patients' cognitive abilities as measured by formal testing, but self-reports did not. Patients did recognize deterioration in ADLs over time, despite progressively worsening cognitive ability. These data indicate that the capacity for self-observation is partially preserved in Alzheimer's patients in mild to moderate stages. Patient self-reports can provide valuable data for clinicians, but should be supplemented by detailed information from caregivers.