The present study compared 20 patients with mild to moderate Alzheimer's disease with 20 older controls (ages 69-94 years) on their ability to make inferences about emotions and beliefs in others. Six tasks tested their ability to make 1st-order and 2nd-order inferences as well as to offer explanations and moral evaluations of human action by appeal to emotions and beliefs. Results showed that the ability to infer emotions and beliefs in 1st-order tasks remains largely intact in patients with mild to moderate Alzheimer's. Patients were able to use mental states in the prediction, explanation, and moral evaluation of behavior. Impairment on 2nd-order tasks involving inference of mental states was equivalent to impairment on control tasks, suggesting that patients' difficulty is secondary to their cognitive impairments. ((c) 2006 APA, all rights reserved).