Objectives Psychotic symptoms and behavioral disturbances area concern in the care of elderly patients with Alzheimer's dementia (AD). This study was conducted to compare the efficacy of olanzapine versus placebo in patients with psychotic symptoms associated with AD in long-term or continuing-care settings. Methods Patients (n =652) with AD and delusions or hallucinations were randomly assigned to 10 weeks of double-blind treatment with placebo or fixed-dose olanzapine (1.0, 2.5, 5.0, 7.5 mg/day). Results Mean age was 76.6 +/- 10.4 years. Repeated-measures analysis showed significant improvement from baseline in NPI/NH Psychosis Total scores (sum of Delusions, Hallucinations items-primary efficacy measure) in all five treatment groups (p < 0.001), but no pair-wise treatment differences were seen at the 10-week endpoint. However, under LOCF analysis, improvement in the 7.5 mg olanzapine group (-6.2 +/- 4.9) was significantly greater than with placebo (-5.0 +/- 6.1, p = 0.008), while endpoint CGI-C scores showed the greatest improvement in the Olz 2.5 olanzapine group (2.8 +/- 1.4, p = 0.030) relative to placebo (3.2 +/- 1.4). There were significant overall treatment-group differences in increased weight, anorexia, and urinary incontinence, with olanzapine showing numerically higher incidences. However, neither the incidence of any other individual events, including extrapyramidal symptoms, nor of total adverse events occurred with significantly higher frequency in any olanzapine group relative to placebo. No clinically relevant significant changes were seen across groups in cognition or any other vital sign or laboratory measure, including glucose, triglyceride, and cholesterol. Conclusions While 1.0 mg olanzapine did not show significant differences from placebo, the 2.5 mg dose was a reasonable starting dose. Olanzapine at 7.5 mg/day significantly decreased psychosis and overall behavioral disturbances (NPI/NH, BPRS) and was well tolerated Copyright (C) 2004 John Wiley Sons, Ltd.