With our ageing population, the number of older adults with cognitive impairment has also increased. There is both an acute and growing need for evidence-based assessments to identify their decision making capacity and competence. In the present article we (1) present definitions of decision-making capacity and competence, (2) review cognitive functions that are central to decision-making capacity as well as the methods and procedures commonly used to assess these domains, and (3) address the communication of assessment findings to patients and their loved ones. The importance of assessing decision-making capacity in the context of specific functions and of respecting the values and interests of older adults are emphasized.