• Twenty-six patients with mixed symptoms of depression and cognitive impairment were studied with serial clinical ratings and sleep electroencephalograms during a one-night sleep-deprivation procedure. A subgroup of these patients with depressive pseudodementia (n = 8) had less severe symptoms of dementia at baseline and showed significant improvements in both Hamilton Depression Rating Scale scores and Profile of Mood States tension scores following sleep deprivation, while another subgroup of patients having primary degenerative dementia with depression (n =18) showed no change or worsening in Hamilton depression and Profile of Mood States tension ratings. Baseline sleep measures demonstrated significantly higher rapid eye movement (REM) percent and phasic REM activity/intensity in pseudodemented compared with demented patients. While both groups had increases in sleep efficiency, sleep maintenance, and slowwave sleep following sleep deprivation, recovery night 2 was characterized by greater first REM period duration in depressive pseudodementia than in dementia. These differences in REM sleep rebound (using an REM period 1 cutoff of ≥25 minutes) permitted correct identification of 88.5% of patients. Implications of these data for current theories regarding sleep, aging, and psychopathology are discussed.