Depression and dementia are both common conditions in older people, and they frequently occur together. Late life depression affects about 3.0-4.5% of adults aged 65 and older. Depression occurs in up to 20% of patients with Alzheimer’s disease and up to 45% of patients with vascular dementia. Rather than a risk factor, depression with onset in later life is more likely to be either prodromal to dementia or a condition that unmasks pre-existing cognitive impairment by compromising cognitive reserve. Depression can be a psychological response to receiving a diagnosis of dementia. The distinction between depression and early dementia may be particularly difficult. Detailed histories obtained from patients and their relatives as well as longitudinal follow-up are important. Cognitive testing can be very helpful. It is preferable to use a neuropsychological test that is sensitive to subtle cognitive changes and assesses all cognitive domains, such as the Montreal Cognitive Assessment. Older people with depression are at raised risk of dementia and this risk is increased if they have had symptoms for a long time, if their symptoms are severe, where there are multiple (vascular) comorbidities, and where there are structural brain changes including hippocampal atrophy and white matter abnormalities.