From: http://www.neurologychannel.com/dementia/diagnosis.shtml#adjump
A diagnosis of dementia requires a medical history; physical examination, including neurological examination); and appropriate laboratory tests.
Taking a thorough medical history involves gathering information about the onset, duration, and progression of symptoms; any possible risk factors for dementia, such as a family history of the disorder or other neurological disease; history of stroke; and alcohol or other drug (prescription or over-the-counter) use.
The American Psychiatric Association has established two generally accepted criteria for the diagnosis of dementia: (1) erosion of recent and remote memory and (2) impairment of one or more of the following functions:
Language
misuse of words or inability to remember and use words correctly (i.e., aphasia)
Motor activity
unable to perform motor activities even though physical ability remains intact (i.e., apraxia)
Recognition
unable to recognize objects, even though sensory function is intact (i.e., agnosia)
Executive function
unable to plan, organize, think abstractly
Symptoms often develop gradually and show a progressive deterioration in function.