The presence of depression is common among the elderly and it often complicates the early diagnosis of Alzheimer's disease (AD). In this study, we searched for brain activity measures that characterise AD. We compared brain magnetic activity profiles during a memory task, obtained from patients with AD, elderly patients with late onset depression, and age matched volunteers without history of neurological or psychiatric disease. AD patients showed significantly reduced activity in left temporal lobe regions during late portions of the event related magnetic response (400 ms or later after stimulus onset), compared with both groups of patients who did not present with serious cognitive decline. This finding highlights the potential usefulness of MEG protocols supporting the differential diagnosis of AD and major depression related cognitive decline in the elderly.