This study evaluated the impact of distractor objects and their similarity to target objects on everyday task performance in dementia. Twenty participants with dementia due to Alzheimer's disease (n = 12) or subcortical vascular disease (n = 8) were videotaped while they performed 3 discrete tasks: (1) make a cup of coffee, (2) wrap a gift, and (3) pack a lunch under two conditions that were counterbalanced across participants. The conditions differed in terms of the type of distractor objects included in the workspace: (1) Target-Related Distractor Condition - distractor objects were functionally and visually similar to target objects (e.g., salt for sugar) (2) Unrelated Distractor Condition - distractors were neither visually nor functionally similar to targets (e.g., glue for sugar). Participants touched (t = 4.19; p < .01) and used (z = 3.00; p < .01) significantly more distractors, made more distractor errors (i.e., substitutions; t = 2.93; p < .01), and took longer to complete tasks (t = 2.27; p < .05) in the Target-Related Distractor condition. The percent of steps accomplished and non-distractor errors did not differ across conditions (t < 1.26; p > .05 for both). In summary, distractors that were similar to targets elicited significant interference effects circumscribed to object selection.