Summary. Background: Atrial fibrillation (AF) is associated with cognitive impairment and dementia, perhaps through encouraging a prothrombotic state and cardioembolism. Objectives: We wished to test the hypotheses that hemostatic function is altered in subjects with AF who develop dementia, and that long-term warfarin anticoagulation is protective against this complication. Patients and methods: Recruitment was from an observational cohort study of AF. Baseline assessment included measurement of plasma fibrinogen, fibrin D-dimer, prothrombin fragment 1+2 (F1+2), thrombin–antithrombin complexes (TAT), von Willebrand factor and tissue plasminogen activator. We assessed cognitive function after 3 years' follow-up using the 13-item modified Telephone Interview for Cognitive Status (TICSm) and the short form of the Informant Questionnaire on Cognitive Decline in the Elderly (IQCODE). Results: Of the 218 subjects assessed, 145 (66%) were prescribed warfarin. Forty-nine (22%) met TICSm/IQCODE criteria for dementia. D-dimer, F1+2 and TAT levels were higher in AF subjects with dementia compared with those without (medians 81 vs. 60 ng mL−1, P = 0.008; 0.76 vs. 0.49 nmol L−1, P = 0.006; and 1.78 vs. 1.44 µg L−1, P = 0.003, respectively). These associations became of borderline statistical significance following adjustment for age. Logistic regression showed a trend towards warfarin use being independently associated with reduced prevalence of dementia (odds ratio 0.52, P = 0.08). Conclusions: We found evidence of increased thrombin generation and fibrin turnover in subjects with AF and dementia compared with those without dementia. Long-term warfarin use may be protective against the development of dementia in subjects with AF.