Stress may be a risk factor for dementia, however it is unknown whether post-traumatic stress disorder (PTSD) symptoms are associated with incident dementia in community-dwelling older individuals. The aim was to determine whether lifetime major trauma with and without re-experiencing of PTSD symptoms is associated with later-life cognition and dementia risk. Participants were 1,700 community-dwelling older adults (65+) in the longitudinal ESPRIT study followed over 14 years. Lifetime major traumatic exposure and PTSD were assessed using Watson's PTSD Inventory. Cognitive tests assessed global cognition, visual memory, verbal fluency, psychomotor speed and executive function. Incident dementia was diagnosed according to DSM-IV criteria. Lifetime major trauma (versus no trauma) was associated with significantly increased executive function and increased global function in men, however women with lifetime trauma and re-experiencing symptoms had a significantly increased risk of low global cognition. Over 14 years, lifetime trauma without re-experiencing symptoms was associated with a significantly decreased risk of incident dementia, particularly for women. Lifetime major trauma without re-experiencing symptoms (but not with) may be protective for later life cognitive function. However, the mechanisms and moderating factors underlying these association requires further investigation.