Although cognitive dysfunction is the hallmark of dementia, behavioral and psychological symptoms of dementia (BPSD), such as psychosis, aggression, sleep disturbance, agitation, and mood disorders, develop in most elderly patients at some stage. These symptoms pose major difficulties in the day-to-day care of patients and are likely to impair the quality of life of both patient and caregiver. Patients exhibiting BPSD should be assessed in a detailed clinical interview to establish symptoms causing distress to the patient and/or caregiver. Several mood and behavior scales with good psychometric properties are available for patient evaluation. Initial intervention should focus on nonpharmacologic measures, and the quality of patient care should be optimized with potential physical, environmental, social, and psychiatric triggers being addressed where possible. Caregiver education, support, and behavioral training can also be effective in alleviating BPSD. However, pharmacologic intervention is necessary in many cases and includes use of antidepressants for mood disorders, anticonvulsants for nonpsychotic agitation, and antipsychotics for aggression, agitation, and psychotic symptoms. Conventional antipsychotics have shown modest benefit over placebo in the treatment of psychosis and agitation in dementia patients; however, they are associated with treatment-emergent side effects, particularly extrapyramidal symptoms (EPS). Atypical antipsychotics such as risperidone, olanzapine, and quetiapine are at least as effective as conventional antipsychotics, are better tolerated, and have a lower propensity for EPS. There are, however, significant differences between atypical agents with regard to receptor affinities and, therefore, side effect profiles. Patients' vulnerability to these side effects should be considered when making individual treatment decisions.