One hundred nine outpatients with Alzheimer's disease (AD) were neuropsychiatrically evaluated and rated on standardized measures of depression, activities of daily living (ADL), nonmood behavioral disturbance, and burdensome events such as serious wandering, falls, and accidents. Distribution of depression scores revealed three patient groups: very few depressive symptoms (51%), minor depression (27%), and major depression (22%). Major depression was associated with substantially greater impairment in ADL, worse nonmood behavioral disturbance (such as aggression), and more frequent serious wandering, even after adjusting for severity of dementia or comorbid health problems. Minor depression was also associated with nonmood behavioral disturbance and wandering. The authors conclude that both major and minor depression are common in AD and produce considerable mood and nonmood morbidity affecting both patients and caregivers. Efforts are warranted to identify and treat depression in AD.