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Abstract Introduction The Shanghai Aging Study is a community‐based study aiming to investigate the incidence and progression of cognitive decline in Chinese elderly, with the operational procedures and diagnostic criteria similar to cohort studies in developed countries. Methods We prospectively evaluated 362 individuals with mild cognitive impairment (MCI) diagnosed at baseline through a clinical and neuropsychological interview. Diagnoses of dementia and MCI were made using standard criteria via consensus diagnosis. Results The conversion rate to dementia was 6.0 per 100 person‐years, while the reversion rate to cognitive normal was 7.8 per 100 person‐years. Amnestic MCI multiple domains was the most risky type for dementia (conversion rate: 14.2 per 100 person‐years). Older age (hazard ratio [HR] = 1.09), apolipoprotein E (APOE ε4) (HR = 2.15), and low MMSE score (HR = 1.18) were predictors for dementia. Discussion Approximately 6% of elderly with MCI progress to dementia annually. Prospective studies are needed to further examine risk and protective predictors and to seek proper interventions for cognitive decline.