Background. Known risk factors for Alzheimer's disease and other dementias include medical conditions, genetic vulnerability, depression, demographic factors and mild cognitive impairment. The role of feelings of loneliness and social isolation in dementia is less well understood, and prospective studies including these risk factors are scarce. Methods. We tested the association between social isolation (living alone, unmarried, without social support), feelings of loneliness and incident dementia in a cohort study among 2173 non-demented community-living older persons. Participants were followed for three years when a diagnosis of dementia was assessed (Geriatric Mental State (GMS) Automated Geriatric Examination for Computer Assisted Taxonomy (AGECAT)). Logistic regression analysis was used to examine the association between social isolation and feelings of loneliness and the risk of dementia, controlling for sociodemographic factors, medical conditions, depression, cognitive functioning and functional status. Results. After adjustment for other risk factors, older persons with feelings of loneliness were more likely to develop dementia (OR 1.64, 95% CI 1.05 to 2.56) than people without such feelings. Social isolation was not associated with a higher dementia risk in multivariate analysis. Conclusions. Feeling lonely rather than being alone is associated with an increased risk of clinical dementia in later life and can be considered a major risk factor that, independently of vascular disease, depression and other confounding factors, deserves clinical attention. Feelings of loneliness may signal a prodromal stage of dementia. A better understanding of the background of feeling lonely may help us to identify vulnerable persons and develop interventions to improve outcome in older persons at risk of dementia.