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Dementia and depression are mental health problems that are commonly encountered in neuropsychiatric practice in the elderly. Approximately, half of the patients with late-onset depression have cognitive impairment. The prevalence of depression in dementias has been reported to be between 9 and 68%. Depression has been both proposed to be a risk factor for dementia as well as a prodrome of dementia. This article is a selective literature review of the complex relationship between the two conditions covering definitions, epidemiology, related concepts, treatment, and emerging biomarkers. The methodological issues and the mechanisms underlying the relationship are also highlighted. The relationship between the two disorders is far from conclusive.