This study examined the relationship between two risk factors for dementia, the apolipoprotein (APOE) epsilon4 allele and poor memory test performance. Participants were from the Canadian Study of Health and Aging, a 4-year longitudinal population-based study. Persons with no cognitive impairment who had an epsilon4 allele but whose memory was average or better were not at increased risk of developing dementia after five years. Risk was increased for those with below average memory and no epsilon4 allele, but was particularly increased for those with below average memory and an epsilon4 allele. While the APOE epsilon4 allele was associated with slightly lower memory test performance for persons without cognitive impairment at baseline, it only increased their risk of developing dementia if their memory was below average.