The progress of two groups (n = 15 each) of elderly patients at a short-term residential treatment facility was compared. One group was diagnosed as having dementia; the other group had various psychiatric problems but no diagnosed dementia. Both were treated in a behavioral program designed to retrain the skills needed for noninstitutional living. Demented subjects showed improvements comparable to the nondemented subjects in several skills, while showing little or no progress in other areas. Implications for remediation of skill deficits in the demented elderly are discussed.