Visual hallucinations (VH) are common in Parkinson's disease (PD) and lead to a poor quality of life. For a long time, dopaminergic therapy was considered to be the most important risk factor for the development of VH in PD. Recently, the cholinergic system, including the pedunculopontine nucleus (PPN), has been implicated in the pathophysiology of VH. The aim of the present study was to investigate grey matter density of the PPN region and one of its projection areas, the thalamus. Thirteen non-demented PD patients with VH were compared to 16 non-demented PD patients without VH, 13 demented PD patients (PDD) with VH and 11 patients with dementia with Lewy bodies (DLB). Isotropic 3-D T1-weighted MRI images (3T) were analysed using voxel-based morphometry (VBM) with the PPN region and thalamus as ROIs. PD and PDD patients with VH showed grey matter reductions of the PPN region and the thalamus compared to PD patients without VH. VH in PD(D) patients are associated with atrophy of the PPN region and its thalamic target area, suggesting that a cholinergic deficit may be involved in the development of VH in PD(D). © 2011 The Author(s).