Among the many losses that a patient with dementia inevitably experiences is loss of competency. The patient with a degenerative dementia experiences gradual and progressive impairment of multiple abilities, which may interfere with his or her competency in a number of realms, including medical or legal decision making, driving, and independent living. It is common for concerns about competency to arise while providing dementia care. Family members, other caregivers, members of the health care team, courts, and other physicians may trigger questions related to competency. The treating physician is in a unique position to address these concerns. The challenges of competency determination can be met with an understanding of the medical and legal principles behind the notion of competency. The physician's role in competency determinations is to assess capacity. Although determination of capacity often proves to be a demanding challenge for the physician, energy spent in this endeavor may result in preservation of the autonomy of the patient with dementia and overall improved quality of life at its end stages.