Depression and cognitive disorders, including dementia and mild cognitive impairment, are common in the elderly. Depression is also a common feature of cognitive impairment although the symptoms of depression in cognitive impairment differ from depression without cognitive impairment. Pre-morbid depression approximately doubles the risk of subsequent dementia. There are two predominant, though not mutually exclusive, constructs linking pre-morbid depression to subsequent cognitive impairment: Alzheimer's pathology and the vascular depression hypothesis. When evaluating a patient with depression and cognitive impairment, it is important to obtain caregiver input and to evaluate for alternative etiologies for depressive symptoms such as delirium. We recommend a sequential approach to the treatment of depression in dementia patients: (1) a period of watchful waiting for milder symptoms, (2) psychosocial treatment program, (3) a medication trial for more severe symptoms or failure of psychosocial interventions, and (4) possible ECT for refractory symptoms.