Background: A persistent course of depression has been described in subjects with and without dementia. Up to the present it is unclear to what extent dementia affects the prognosis of depression. Method: At baseline and at 6 and 12 months follow-up AGECAT depression diagnoses were made in 49 subjects with and 72 subjects without DSM-III-R dementia living in homes for the elderly. Results: Adjusting for demographic characteristics and physical health, dementia was not associated with the severity of depression at follow up. The baseline depression severity and to a lesser extent somatic complaints predicted a bad prognosis of depression in the total sample. Limitations: Because of the high vulnerability of the residents the results cannot be generalised to other populations of elderly subjects. Conclusion: Depression is persistent in residents of homes for the elderly. Dementia does not affect its course. (C) 2000 Elsevier Science B.V. All rights reserved.