Depression, cognitive impairment, and disability often coexist in older adults and can lead to patient suffering and family disruption. Moreover, many depressed, cognitively impaired older adults have slow, poor, or unstable response to antidepressant drugs. Despite the need for treatments other than medication, most psychotherapy research focuses on either cognitively intact patients with limited disability or on dementia patients with pronounced disability. Thus, the available treatments do not fully address the needs of the large number of depressed elders with intermediate cognitive impairment and disability. Previous studies with cognitively impaired psychiatric populations have taught participants compensatory strategies to overcome their behavioral and cognitive limitations. This study will evaluate the efficacy of Problem Adaptation Therapy (PATH) a type of psychotherapy using a problem solving therapy (PST) approach, specially tailored compensatory strategies and environmental adaptations and caregiver involvement in treating depressed, cognitively impaired older adults.