Psychosis is one of the most common conditions in later life with a lifetime risk of 23 %. Despite its high prevalence, late-onset psychosis remains a diagnostic and treatment dilemma. There are no reliable pathognomonic signs to distinguish primary or secondary psychosis. Primary psychosis is a diagnosis of exclusion and the clinician must rule out secondary causes. Approximately 60 % of older patients with newly incident psychosis have a secondary psychosis. In this article, we review current, evidence-based diagnostic and treatment approaches for this heterogeneous condition, emphasizing a thorough evaluation for the "six d's" of late-life psychosis (delirium, disease, drugs dementia, depression, delusions). Treatment is geared towards the specific cause of psychosis and tailored based on comorbid conditions. Frequently, environmental and psychosocial interventions are first-line treatments with the judicious use of pharmacotherapy as needed. There is an enormous gap between the prevalence of psychotic disorders in older adults and the availability of evidence-based treatment. The dramatic growth in the elderly population over the first half of this century creates a compelling need to address this gap.