Diffuse Lewy body disease (DLB) is a neurodegenerative disorder characterized by dementia, fluctuations in mental status, hallucinations, and parkinsonism. Diffuse Lewy body disease is the second most common cause of dementia, following Alzheimer's disease. The treatment of DLB includes cholinergic therapy for cognitive impairment, atypical neuroleptics to alleviate hallucinations, and levodopa/carbidopa to improve parkinsonism. The recognition and diagnosis of DLB has critical treatment implications. Centrally acting cholinesterase inhibitors, such as rivastigmine, donepezil, and galantamine partially reverse decreased cortical cholinergic activity and may improve cognition and neuropsychiatric symptoms in DLB. Rivastigmine has been demonstrated to improve cognition and neuropsychiatric symptoms in patients with DLB without worsening parkinsonian features. Due to the potential adverse events associated with neuroleptics in this population, treatment with cholinesterase inhibitors is currently considered first-line therapy in the treatment of hallucinations and mental status fluctuations in DLB. Exquisite sensitivity to neuroleptic medications is a hallmark of DLB and life-threatening complications have been reported. Caution should be exercised when implementing antipsychotic therapy for the treatment of behavioral disturbances of DLB. When required, atypical neuroleptics with the least extrapyramdial side effects, such as quetiapine, should be used. The parkinsonian features of DLB may respond to dopaminergic therapy with levodopa. If parkinsonian symptoms result in clinical disability, a trial of levodopa is warranted. Unfortunately, dopaminergic medications may worsen hallucinations. Because dopamine agonists have a greater tendency to induce hallucinations and somnolence, levodopa is the treatment of choice for parkinsonism in DLB. Rapid eye movement (REM) sleep behavior disorder (RBD) is now recognized as a feature of DLB. Awareness of the presence of this symptom in patients with DLB is important and treatment with low dose clonazepam may help. Cholinergic aumentation may also improve these symptoms in patients with DLB.