OBJECTIVES: Persistent cognitive impairment (PCI) after remission of depressive symptoms is a major adverse outcome of late-life depression (LLD). The purpose of this study was to examine neural substrates associated with PCI in LLD. DESIGN: Longitudinal study. SETTING: Outpatient depression treatment study at Duke University. PARTICIPANTS: Twenty-three patients with LLD completed a 2-year follow-up study, and were in a remitted or partially remitted state at Year 2. METHODS: At first entry to the study (Year 0), all participants had a functional magnetic resonance imaging scan while performing an emotional oddball task. For the purpose of this report, the primary functional magnetic resonance imaging outcome was brain activation during target detection, which is a measure of executive function. The Consortium to Establish a Registry for Alzheimer's Disease neuropsychological battery was used to assess cognitive status yearly, and the Montgomery-Åsberg Depression Rating Scale was used to assess severity of depression at Year 0 and every 6 months thereafter for 2 years. We investigated changes in brain activation at Year 0 associated with PCI over 2 years. RESULTS: Patients with PCI at the 2-year follow-up date had significantly decreased activation at Year 0 in the dorsal anterior cingulate cortex, hippocampus, inferior frontal cortex, and insula compared to non-PCI patients. CONCLUSIONS: Our results suggest individuals who have LLD with PCI have decreased activation in the similar neural networks associated with the development of Alzheimer disease among nondepressed individuals. Measuring neural activity in these regions in individuals with LLD may help identify patients at-risk for cognitive impairment.