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Objective Research indicates that the presence of psychiatric disorders is predictive of cognitive performance and increases the risk of developing dementia. Some have found that psychiatric disorders decrease cognitive performance while others have found that they increase cognitive performance. The purpose of the present study is to further investigate the relationship between psychiatric disorders and cognitive performance in older Veterans. Method The convenience sample included 216 older Veterans who were screened at the VA Palo Alto Health Care System (94% male, age = 71.8 ± 8.3). Psychiatric disorders (e.g., mood and anxiety disorders) were assessed using the Mini Neuropsychiatric Interview for DSM-IV. Domains of cognitive performance (e.g., Learning and Memory, Executive Function, Processing Speed, Attention, Visuospatial Ability, and Language) were measured using a comprehensive neuropsychological assessment battery. Results Results indicated that 25% of the sample had depression (n = 56) and 16% had anxiety (n = 34). Psychiatric diagnoses largely had no effect on executive function, processing speed, or language. Age was found to moderate the association between depression and learning and memory, though there were no main effects for depression on learning and memory. Anxiety was significantly associated with learning and memory performance, and age was found to further moderate that relationship. Age also moderated the association between depression and attention, though no main effects for depression were seen in the model. Anxiety had no effect on attention. Conclusions Age and psychiatric diagnoses interact to differentially impact cognitive functioning in late life. These findings support prior research on the complex relationship between psychiatric disorders and late-life cognitive impairment.