Older adults with and without dementia have repeatedly shown poorer performance on tasks thought to tap theory of mind abilities. However these tasks may rely on other cognitive functions such as memory and as a result it is not clear if task difficulties reflect poorer ability to infer mental states or represent declines in general cognitive function. It is argued that theory of mind occurs as a result of decoding basic social information from others such as the emotion experienced, intentionality cues, the direction of eye gaze and the ability to engage in shared attention. This thesis contains a task assessing each of these precursors with the experimental chapters reporting two studies, the first establishes if differences emerge in healthy aging between young and older adults.The second study uses the same task to determine if those with dementia differ from healthy controls. When decoding facial emotion (chapter four) older adults were poorer than younger recognising negative emotions showing a bias for choosing the label disgust.Those with dementia differed qualitatively from age-matched controls showing a bias to label negative emotions as positive. When decoding intentionality from the body (chapter five) older adults showed most difficulty decoding negative affect. Those with dementia were significantly worse decoding emotions but also showed tendencies to choose positive emotion labels in this modality. The ability to discriminate between different directions of eye gaze (chapter six) revealed older adults were worse at discriminating between direct and averted gaze, dementia impacted further on this ability. When establishing shared attention (chapter seven) older adults used gaze cues significantly less than young however those with dementia performed comparably to their age matched controls.These results are evaluated in the context of relevant theories of aging and the implications for the social function of those with dementia are discusse