Psychosis is a common and distressing symptom in people with Alzheimer disease, and few safe and effective treatments are available. However, new approaches to symptom assessment and treatment are beginning to drive the field forward. New nosological perspectives have been provided by incorporating the emergence of psychotic symptoms in older adults - even in advance of dementia - into epidemiological and neurobiological frameworks as well as into diagnostic and research criteria such as the International Psychogeriatric Association criteria for psychosis in neurocognitive disorders, the Alzheimer's Association International Society to Advance Alzheimer's Research and Treatment (ISTAART) research criteria for psychosis in neurodegenerative disease, and the ISTAART criteria for mild behavioural impairment. Here, we highlight the latest findings in genomics, neuroimaging and neurobiology that are informing approaches to drug discovery and repurposing. Current pharmacological and non-pharmacological treatment options are discussed, with a focus on safety and precision medicine. We also explore trial data for pimavanserin, a novel agent that shows promise for the treatment of psychosis in people with dementia, and discuss existing agents that might be useful but need further exploration such as escitalopram, lithium, cholinesterase inhibitors and vitamin D. Although the assessment and management of psychosis in people with dementia remain challenging, new opportunities are providing direction and hope to the field.