Loss of competency is an inevitable consequence of Alzheimer disease (AD) and other progressive dementias. Of particular importance to clinicians and researchers studying dementia is determining whether a patient has the capacity to provide informed consent to treatment and medical research. No widely accepted standardized instruments exist for competency assessment, nor has competency assessment training been available to physicians. As a result, physician competency assessment has been a subjective and even idiosyncratic process. Recent studies have suggested that physicians have difficulty assessing capacity to consent in older adults and frequently disagree in their competency judgments. Accordingly, one important goal for advancing ethical and legal research in AD will involve the development of standardized approaches to determining patient capacity to give consent. This article reports the findings of recent empirical studies of competency determination in AD, focusing on work in the areas of physician competency assessment, development of standardized assessment instruments, and neuropsychological modeling of competency loss. Future directions for research in these three areas are identified.