Depression and dementia, among most important mental health problems are highly prevalent in elderly individuals. Both cause severe consequences for patients including functional decline, worsened outcome of many medical illnesses, increased mortality and impaired quality of life of patients and their caregivers. Their diagnosis can be difficult due to coexistence of some of the symptoms and relatively indolent onset. The differential diagnosis of depression and dementia is vital due to a different treatment, their consequences and prognosis. It is important to detail the medical history from the patient’s caregiver for more information. There are various implements, that assess the cognitive impairment and depressive symptoms, to support the diagnosis. The appropriate management of dementia and depression can improve the quality of life of patient and his caregiver.