In this phase I-II parallel design, randomized, double-blind clinical trial we will determine if 3,000 or 30,000 units ingested hrIFN-a prevents deterioration of cognitive functioning in patients with dementia of Alzheimer's type (AD) and whether ingested hrIFN-a treatment decreases acute phase reactants and pro-inflammatory cytokine IL-6 in mild to moderate AD. We predict that the novel anti-inflammatory agent ingested human recombinant interferon alpha (hrIFN-a) will modulate inflammation and inhibit the natural history of AD progression. If you are eligible, you will receive Aricept for 5 weeks (donezepil) and thereafter in addition to Aricept either placebo (inactive substance) or interferon alpha at 3,000 or 30,000 units every day for 12 months.