Psychosis is common in late life and exacts enormous costs to society, affected individuals, and their caregivers. A multitude of etiologies for late-life psychosis exist, the two most prototypical being schizophrenia and psychosis of Alzheimer’s Disease (AD). As such, this review will focus on the non-affective, neuropsychiatric causes of chronic psychosis in the elderly, specifically schizophrenia, delusional disorder, and the psychosis of AD and other dementias. As evidenced in this review, the current research regarding the onset and course of late-life schizophrenia reflects a more favorable prognosis than that painted by the Kraepelinian notion of schizoprenia as “dementia praecox.” Antipsychotics are useful in controlling the symptoms of late-life schizophrenia, but their use among older adults warrants increased vigilance because of older adults’ increased proclivity to side effects. Psychosocial interventions can be effective, usually in conjunction with medication. Meanwhile, psychosis of AD occurs in nearly half of people with AD and is associated with increased hospitalizations, institutionalization, caregiver distress, and mortality. Despite the profound consequences of psychotic symptoms associated with dementias, the extant literature does not afford clinicians clear, consistent guidance on how to provide optimal treatment to specific patients. Second generation antipsychotics are usually the choice treatment for psychosis, but the black box warning regarding their associated 1–2% increased absolute risk in stroke and overall mortality in patients with dementia complicates their use. Using second generation antipsychotics in low doses for brief periods and discontinuing them when possible is the best clinical practice for dementia-related psychosis. Psychosocial interventions for the treatment of psychosis with AD appear promising in empirical research, but more rigorous study is needed.