OBJECTIVE: The goals of this longitudinal investigation were 1) to study the rate of development of irreversible dementia in elderly depressed patients with a dementia syndrome that subsided after improvement of depression and 2) to compare it with that of depressed, never-demented patients. METHOD: The subjects were 57 elderly patients consecutively hospitalized for major depression. At entry into the study, 23 subjects also met criteria for "reversible dementia," while 34 were without dementia. After a systematic clinical evaluation, the subjects were followed up at approximately yearly intervals for an average of 33.8 months. RESULTS: Irreversible dementia developed significantly more frequently in the depressed group with reversible dementia (43%) than in the group with depression alone (12%). Survival analysis showed that the group with reversible dementia had a 4.69- times higher chance of having developed dementia at follow-up than the patients with depression alone. No clinical characteristics at entry into the study were found to discriminate the subjects who developed irreversible dementia during the follow-up period from those who remained nondemented. CONCLUSIONS: These findings suggest that geriatric depression with reversible dementia is a clinical entity that includes a group of patients with early-stage dementing disorders. Therefore, identification of a reversible dementia syndrome is an indication for a thorough diagnostic workup and frequent follow-ups in order to identify treatable neurological disorders.