BACKGROUND: Delirium is common, distressing and associated with poor outcomes. Previous studies investigating the impact of delirium on cognitive outcomes have been limited by incomplete ascertainment of baseline cognition or lack of prospective delirium assessments. This study quantified the association between delirium and cognitive function over time by prospectively ascertaining delirium in a cohort aged ≥ 65 years in whom baseline cognition had previously been established. METHODS: For 12 months, we assessed participants from the Cognitive Function and Ageing Study II-Newcastle for delirium daily during hospital admissions. At 1-year, we assessed cognitive decline and dementia in those with and without delirium. We evaluated the effect of delirium (including its duration and number of episodes) on cognitive function over time, independently of baseline cognition and illness severity. RESULTS: Eighty two of 205 participants recruited developed delirium in hospital (40%). One-year outcome data were available for 173 participants: 18 had a new dementia diagnosis, 38 had died. Delirium was associated with cognitive decline (-1.8 Mini-Mental State Examination points [95% CI -3.5 to -0.2]) and an increased risk of new dementia diagnosis at follow up (OR 8.8 [95% CI 1.9-41.4]). More than one episode and more days with delirium (>5 days) were associated with worse cognitive outcomes. CONCLUSIONS: Delirium increases risk of future cognitive decline and dementia, independent of illness severity and baseline cognition, with more episodes associated with worse cognitive outcomes. Given that delirium has been shown to be preventable in some cases, we propose that delirium is a potentially modifiable risk factor for dementia.