Vascular dementia (VaD) is the second most common cause of dementia and can coexist with other causes of dementia. VaD may be preventable and improvement with therapy is possible; thus, early diagnosis is essential. The conventional concept of VaD is that of multi-infarct dementia. However, VaD is not limited to multi-infarct dementia; it arises from various vascular mechanisms and changes in the brain, and has various clinical manifestations with different causes. Critical conceptual questions include what constitutes the cognitive syndrome and what are the vascular causes; these lead to consideration of whether the term 'vascular dementia' should be replaced by a milder and broader category of 'vascular cognitive impairment' and of what location, extent, type, tempo and combination of ischaemic brain changes are critical to the development of VaD. Current diagnostic criteria for VaD are based on the cerebral infarct concept. The criteria of the National Institute of Neurological Disorders and Stroke-Association Internationale pour la Recherche et 1'Enseignement en Neurosciences (NINDS-AIREN) include the presence of dementia and cerebrovascular disease (CVD) and a relationship between these two disorders. CVD is defined as the presence of focal neurological signs with or without a history of stroke and evidence of relevant CVD by brain imaging (e.g. multiple large-vessel strokes, single strategically placed infarct, multiple lacunae, extensive ischaemic white matter lesions). The relationship between dementia and CVD is based on onset of dementia within 3 months following a recognised stroke, and/or an abrupt deterioration in cognitive functions or fluctuating, stepwise progression of cognitive deficits. Supporting clinical features for diagnosis of VaD include early presence of gait disturbance, history of unsteadiness and frequent unprovoked falls, early urinary symptoms, personality and mood changes, depression, psychomotor retardation and abnormal executive function. Main tools for the diagnosis of VaD include detailed history, neurological examination, clinical or neuropsychological mental status examination and relevant laboratory examinations; brain imaging is essential, preferably using magnetic resonance imaging. In primary and secondary prevention the targets are vascular risk factors (e.g. arterial hypertension, cardiac abnormalities, lipid abnormalities) and CVD according to its type (e.g. large-artery, small vessel, cardiogenic). Nimodipine, memantine and propentofylline have shown encouraging effects in the symptomatic and neuroprotective treatment of VaD.