Psychosis of Alzheimer's disease (AD) is characterized by delusions or hallucinations and may be associated with agitation, negative symptoms or depression. There are no psychotropic medications that are approved by the US FDA for the treatment of psychosis of AD. However, atypical antipsychotics have been widely used and recommended by geriatric experts in the management of psychosis of AD in view of the modest efficacy and relative safety until FDA warnings were issued in 2005 and meta-analytic studies showed no significant difference to placebo. The FDA warnings on the cardiac, metabolic, cerebrovascular, and mortality risks have caused serious concerns for the use of atypical antipsychotic agents in elderly patients with dementia. Only a few studies have evaluated prospectively the effects of aripiprazole in psychosis associated with AD. These studies show improvement in the symptoms of psychosis associated with AD with aripiprazole. The safety and tolerability profile of aripiprazole suggests a low potential for negative impact on dementia and overall patient health. Further studies comparing the efficacy and tolerability of aripiprazole vs other atypical antipsychotics in dementia are needed.