We aimed to fill the literature gap by identifying the clinical benefits of aromatherapy in older adults with dementia, and its efficacy in reducing behavioral and psychological symptoms of dementia (BPSD) based on available randomized controlled trials (RCT). A systematic review of 11 clinical trials shortlisted from electronic databases from 1995 to 2011 was carried out. The RCT showed that aromatherapy had positive effects on reduction of BPSD, improvement in cognitive functions, increasing quality of life, enhancing independence of activities of daily living and so on. However, adverse effects were noted in some studies. Limitations on methodology are discussed and suggestions on directions of further studies are made. It is recommended that aromatherapy shows the potential to be applied as a therapeutic and safe complementary and alternative therapy for the management of BPSD on more evidence collected from better designed RCT. Geriatr Gerontol Int 2012; 12: 372–382.