Altered functional connectivity precedes structural brain changes and symptoms in dementia. Alzheimer’s disease is the largest contributor to dementia at the population level, and disrupts functional connectivity in the brain’s default-mode network (DMN). We investigated whether a neurobiological model of DMN effective connectivity could predict a future dementia diagnosis at the single-participant level. We applied spectral dynamic causal modeling to resting-state functional magnetic resonance imaging data in a nested case–control group from the UK Biobank, including 81 undiagnosed individuals who developed dementia up to nine years after imaging, and 1,030 matched controls. Dysconnectivity predicted both future dementia incidence (AUC = 0.82) and time to diagnosis (R = 0.53), outperforming models based on brain structure and functional connectivity. We also evaluated associations between DMN dysconnectivity and major risk factors for dementia, revealing strong relationships with polygenic risk for Alzheimer’s disease and social isolation. Neurobiological models of effective connectivity may facilitate early detection of dementia at population level, supporting rational deployment of targeted dementia-prevention strategies.