To determine the prevalence and subtypes of dementia in southern Taiwan, a two-phase study consisting of a phase I screening survey using the Mini-Mental Status Examination (MMSE) and a phase II diagnostic examination using the CERAD neuropsychological battery and the neurobehavioral examination was conducted. According to the household records, stratified random sampling by the degree of urbanization of the community was used, and 2915 inhabitants aged 65 and over participated in this study. The ICD-10NA criteria for dementia, NINCDS-ADRDA guidelines for Alzheimer's disease (AD), and NINDS-AIREN criteria for vascular dementia (VaD) were employed. Three hundred and ninety-eight persons who had MMSE scores below the cutoff values were recruited into the phase II study, of whom 108 had dementia. The prevalence rate (PR) of dementia was 3.7%, increasing from 1.3% in people 65-69 years old to 16.5% in people 85 years old and older. The age-standardized PR (ASPR) was 4.0%. AD (58 cases, 53.7%, PR=2.0%, ASPR=2.3%) was the most common cause of dementia, followed by VaD (25 cases, 23.1%, PR=0.9%, ASPR=0.9%), and mixed dementia (eight cases, 7.4%). After adjusting for age, sex and education using logistic regression analysis, aging was a significant risk factor for AD, VaD and total dementia. Female sex and illiteracy were significant risk factors for AD only. We concluded that the prevalence of dementia in Taiwan is lower than in the developed countries, which could be due to a relatively young elderly population and a high mortality from dementia in Taiwan. AD is the leading cause of dementia in Taiwan. Considering the high stroke prevalence, the relatively lower prevalence of VaD in Taiwan deserves further investigation.