Event-related potentials depend on the context of the target stimulus and relate to the cognitive aspects of discriminating target from nontarget stimuli. For clinical purposes, they are elicited most commonly by auditory stimuli. They are influenced by advancing age and by alterations in mental function. They have been used to distinguish dementia from pseudodementia. More specifically, the P3 component of these potentials has a high sensitivity and specificity to dementia, and a prolongation in P3 latency is therefore helpful in establishing the diagnosis of dementia with confidence. Serial studies can provide a means of following changes in cognitive function over time. It may also be possible to distinguish between different types of dementia by the pattern of electrophysiologic abnormalities and in particular by which components of the event-related potentials are delayed.