The use of nonliteral language in clinical assessment, especially testing the patients’ ability to interpret proverbs, has a long tradition in psychiatry. However, its diagnostic sensitivity and specificity in dementias is not yet clear. The aim of this review article is to examine the current evidence on nonliteral/figurative language (proverb, metaphor, metonymy, idiom, irony, sarcasm) comprehension in Alzheimer's disease and related disorders. A comprehensive literature search identified 25 studies (16 proverb, 3 metaphor, 0 metonymy, 5 idiom, 3 sarcasm) on nonliteral language comprehension in dementia. Studies predominantly indicate a deficit. Most studies investigated Alzheimer's dementia. Applied correctly, nonliteral language is a worthwhile diagnostic tool to evaluate language and abstract thinking in dementias. During assessment, familiarity testing (e.g., by asking “are you familiar with the proverb XY”) is obligatory. Still, future research is needed in several areas: evidence on decline of nonliteral language over the course of the illness is limited. So far, almost no studies delineated proverb comprehension in high risk populations such as patients with mild cognitive impairment. Currently, there is a lack of studies addressing performance in direct comparison to relevant differential diagnosis like older-age depression, delirium, brain lesion, or other psychiatric conditions. (JINS, 2011, 17, 207–218)