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OBJECTIVE: The purpose of this study was to determine the prevalence of dementia among black and white residents on admission to nursing homes and to determine whether demographic and health characteristics known to be associated with dementia were correlated with dementia in this population. METHODS: Data from medical records and structured interviews with family members, nursing staff, and nursing home residents were gathered for 2,285 persons newly admitted to nursing homes in Maryland from 1992 to 1995. A stratified sample of 59 nursing homes was used. An expert panel of five physicians classified each resident as demented, nondemented, or indeterminate. Associations between dementia status, race, and selected characteristics were examined. RESULTS: Black residents (77 percent) were significantly more likely than white residents (57 percent) to be classified as demented. Older age was associated with dementia in both races. Less education, male gender, and a history of a cerebrovascular accident were associated with an increased prevalence of dementia among white residents only. After demographic and health characteristics associated with dementia were controlled for, black race remained independently associated with a diagnosis of dementia. CONCLUSIONS: The rate of dementia on admission to nursing homes was higher among black residents than among white residents, a finding that has implications for the delivery of care. The higher rate may be due to psychosocial factors operating differently in blacks and whites that influence the timing of admission to a nursing home.