Background: Dementia is an increasing public health threat worldwide. The pathogenesis of dementia has not been fully elucidated yet. Inflammatory processes are hypothesized to play an important role as a driver for cognitive decline but the origin of inflammation is not clear. We hypothesize that disturbances in gut microbiome composition, gut barrier dysfunction, bacterial translocation and resulting inflammation are associated with cognitive dysfunction in dementia. Methods: To test this hypothesis, a cohort of 23 patients with dementia and 18 age and sex matched controls without cognitive impairments were studied. Gut microbiome composition, gut barrier dysfunction, bacterial translocation and inflammation were assessed from stool and serum samples. Malnutrition was assessed by Mini Nutritional Assessment Short Form (MNA-SF), detailed information on drug use was collected. Microbiome composition was assessed by 16S rRNA sequencing, QIIME 2 and Calypso 7.14 tools. Results: Dementia was associated with dysbiosis characterized by differences in beta diversity and changes in taxonomic composition. Gut permeability was increased as evidenced by increased serum diamine oxidase (DAO) levels and systemic inflammation was confirmed by increased soluble cluster of differentiation 14 levels (sCD14). BMI and statin use had the strongest impact on microbiome composition. Conclusion: Dementia is associated with changes in gut microbiome composition and increased biomarkers of gut permeability and inflammation. Lachnospiraceae NK4A136 group as potential butyrate producer was reduced in dementia. Malnutrition and drug intake were factors, that impact on microbiome composition. Increasing butyrate producing bacteria and targeting malnutrition may be promising therapeutic targets in dementia. Trial registration: NCT03167983.