Psychosis is a general psychiatric definition used in different psychiatric disorders with severe disruption in thought and perceptions. Patients with psychotic episodes may have hallucinations, delusional beliefs and disorientation. They may show changes in personality. Since onset of psychosis occurs rarely in old age, depression and dementia should be primarily considered especially in elderly patients presenting with hallucinations, delusional beliefs, personality changes and thought disorder. We present a case report of patient with dementia and late onset depression presenting with tactile hallucination. The aim of this case presentation is to focus on the hazards of symptom-based diagnosis and treatment that may cause misdiagnosis in elderly patients. An 85-year-old male patient was admitted to outpatient clinic with a complaint of tingling in his body and the feeling of insects crawling underneath your skin. After physical examination and comprehensive geriatric assessment, psychiatric consultant evaluated patient in Geriatric Medicine department. He was diagnosed with psychotic depression and dementia. Every patient should be examined for the cognitive impairment by the physician. It should also be considered that other psychiatric disorders may accompany by the dementia.