BACKGROUND: Small vessel dementia (SVD) is the most frequent cause of vascular dementia and is regarded a distinct clinical entity. However, the data on the natural course of SVD and drug trials specifically aiming SVD have been sparse. The aim of this study was to answer the following three questions: 1) How does SVD progress? 2) Does cholinesterase inhibitor therapy improves cognitive symptoms and daily activity of life (ADL) in SVD? 3) Is there any clinical difference among the subtypes of SVD? METHODS: According to cholinesterase inhibitor medications, patients with SVD were retrospectively analyzed using Hyoja Dementia registry. In this study, effects of treatment were assessed by comparing the scores of Korea version Mini-Mental State Examination (MMSE), Clinical Dementia Rating scale (CDR), Functional Independence Measure (FIM) at the base line with those at endpoints. RESULTS: After 12 months, the mean MMSE, CDR, FIM scores improved significantly in the cholinesterase inhibitor treatment group, compared with that in no-treatment group. In no-treatment group, annual decline of MMSE was 2.7, compared with 0.3 increment in the treatment group. White matter type of SVD showed worst prognosis compared with other types. CONCLUSIONS: This study suggests that SVD has more benign clinical course than previously reported, and cholinesterase inhibitor improves cognitive and ADL functions in SVD. Among the subtypes of SVD, the white matter type may have poor prognosis.