This study estimated the prevalence of dementia in 2,285 new admissions age 65+ to a statewide sample of 59 nursing homes in Maryland, 1992-1995. Dementia was ascertained according to DSM-III-R criteria by an expert panel of geriatric psychiatrists, neurologists, and a geriatrician using detailed information collected by trained lay evaluators from residents, family, staff, and medical records. Admissions to Maryland nursing homes are similar to admissions to nursing homes elsewhere in the United States. The prevalence of dementia was 48.2% (CI: 43.6-52.8) with an upper bound estimated at 54.5% (CI: 49.9-59.1). Prevalence is highest in facilities with <50 beds versus 200+ beds (65.5% vs 39.6%) and those in urban versus rural areas (50.0% vs 39.1%). Those who are non-White, married, and with fewer years of education are more likely to be demented. Prevalence is highest among those with 4+ physical impairments versus 0-1 (60.3% vs 27.7%) and lowest in those with 4+ comorbidities versus 0-1 (44.8% vs 52.0%). There was considerable overlap in the comorbid status of demented and nondemented admissions, and both groups contained members with only a few functional limitations. Results suggest that the level of medical supervision provided in nursing homes may not be required for some residents with dementia.