The aim of this study was to determine the prevalence of psychiatric symptoms among nondemented individuals with memory changes and whether such symptoms predict progression of functional decline or diagnosis of Alzheimer disease (AD). A semi-structured interview was administered at baseline to controls (n = 32) and to nondemented subjects with memory changes (n = 112) and to each subject's collateral source. The interview assessed the impact of cognition on functional abilities in daily life and a variety of psychiatric symptoms, including symptoms of psychosis, depression, and personality change. Participants were followed annually for 3 years to determine who had progressive functional decline and who progressed to meet clinical criteria for AD. Those diagnosed with AD on follow-up had more symptoms of personality change, such as agitation and passivity, at baseline than those who did not progress to meet clinical criteria for AD. Mild depressive symptoms were also more common among individuals at baseline who subsequently 'converted' to AD. Symptoms of personality change were associated with a more rapid increase in functional difficulty over time, whereas depressive symptoms were not. Changes in personality are more common among subjects with memory changes who go on to develop AD. Particular types of personality change, such as agitation and passivity, are related to progression of functional difficulty over time. Depressive symptoms, although common in prodromal AD, are not associated with a more rapid functional decline.