Depression is a common and devastating neuropsychiatric symptom in the elderly and in patients with dementia. In particular, nearly 80% of patients with Alzheimer's Disease dementia experience depression during disease development and progression. However, it is unknown whether the depression in patients with dementia shares the same molecular mechanisms as depression presenting as primary psychiatric disease or occurs and persists through alternative mechanisms. In this review, we discuss how the clinical presentation and treatment differ between depression in dementia and as a primary psychiatric disease, with a focus on major depressive disorder. Then, we hypothesize several molecular mechanisms that may be unique to depression in dementia such as neuropathological changes, inflammation, and vascular events. Finally, we discuss existing issues and future directions for investigation and treatment of depression in dementia.