Age-related peripheral hearing impairment (HI) is prevalent, treatable, and may be a risk factor for dementia in older adults. In prospective analysis, we quantified the association of HI with incident dementia and with domain-specific cognitive decline in memory, perceptual speed, and processing speed. Data were from the Health, Aging and Body Composition (Health ABC) study, a biracial cohort of well-functioning adults aged 70-79 years. Dementia was defined using a prespecified algorithm incorporating medication use, hospital records, and neurocognitive test scores. A pure-tone average in decibels hearing level (dBHL) was calculated in the better hearing ear using thresholds from 0.5 to 4kHz, and HI was defined as normal hearing (≤25 dBHL), mild (26-40 dBHL), and moderate/severe (>40 dBHL). Associations between HI and incident dementia and between HI and cognitive change were modeled using Cox proportional hazards models and linear mixed models, respectively. Three-hundred eighty seven (20%) participants had moderate/severe HI, and 716 (38%) had mild HI. After adjustment for demographic and cardiovascular factors, moderate/severe audiometric HI (vs. normal hearing) was associated with increased risk of incident dementia over 9 years (hazard ratio: 1.55, 95% confidence interval CI: 1.10, 2.19). Other than poorer baseline memory performance (difference of -0.24 SDs, 95% CI: -0.44, -0.04), no associations were observed between HI and rates of domain-specific cognitive change during 7 years of follow-up. HI is associated with increased risk of developing dementia in older adults. Randomized trials are needed to determine whether treatment of hearing loss could postpone dementia onset in older adults.