OBJECTIVES: To examine the temporal association between depressive symptoms and cognitive functioning and estimate the effect measure modification of the apolipoprotein E (APOE) epsilon4 allele on this relationship. DESIGN: Prospective cohort study. SETTING: General community. PARTICIPANTS: Population-based sample of 598 cognitively intact older adults aged 60 and older, with re-assessments after 3 (N=479) and 6 years (N=412). MEASUREMENTS: Depressive symptoms (Symptom Checklist) and neurocognitive functioning (memory, Visual Verbal Learning Test; attention, Stroop Color-Word Test; processing speed, Letter Digit Substitution Test; general cognition, Mini-Mental State Examination). Longitudinal associations were assessed using linear mixed models. The risk for cognitive impairment, no dementia (CIND) was examined using logistic regression. RESULTS: Adjusting for age, sex, education, and baseline cognition, the rate of change in memory z-scores was 0.00, -0.11, -0.20, and -0.37 for those in the lowest (reference group), second, third, and highest depressive symptom quartiles at baseline, respectively (P<.001 for highest vs lowest quartile). The odds ratios for developing CIND with amnestic features were 1.00, 0.87, 0.69, and 2.98 for the four severity groups (P=.05 for highest vs lowest quartile). Associations were strongest for those with persistent depressive symptoms, defined as high depressive symptoms at baseline and at least one follow-up visit. Results were similar for processing speed and global cognitive function but were not as strong for attention. No APOE interaction was observed. CONCLUSION: Depression and APOE act independently to increase the risk for cognitive decline and may provide targets for prevention and early treatment.