In mid-2003, the Department of Health and Ageing commissioned the Australian Institute of Health and Welfare to investigate the extent to which health and aged care service use can be associated with dementia, to inform an Australian government review of pricing arrangements in residential aged care by Professor Warren Hogan. This report presents the findings of these investigations, examining the prevalence of dementia in the Australian population, the current patterns of service use by people with dementia and the costs associated with this use.