It is commonly thought and taught that most psychiatric disorders other than dementia are much less prevalent among the elderly than among younger adults. This perception is based on a relatively small number of published epidemiologic investigations of the incidence and prevalence of mental illnesses in elderly populations. Most of these studies have had a number of methodologic problems, including improper definitions and diagnostic criteria for older persons. A likely consequence of these misconceptions is that clinically significant and potentially treatable mental illnesses might be overlooked, misdiagnosed, and mistreated in elderly patients. Studies in community samples suggest that many older adults who experience clinically significant psychopathology do not fit easily into our existing nomenclature, and yet are disabled. There is a need to develop aging-appropriate diagnostic criteria for major psychiatric disorders. In this article, we discuss the potential causes of this diagnostic confusion. Four specific classes of disorders-mood (specifically depressive) disorders, schizophrenia (and related psychotic disorders), anxiety disorders, and substance use disorders-are discussed as examples. Finally, we suggest some future steps for clarifying this diagnostic confusion.