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Background: Evidence on the effects of neighborhood socioeconomic disadvantage on dementia risk in racially and ethically diverse populations is limited. Our objective was to evaluate the relative extent to which neighborhood disadvantage accounts for racial/ethnic variation in dementia incidence rates. Secondarily, we evaluated the spatial relationship between neighborhood disadvantage and dementia risk. Methods: In this retrospective study using electronic health records (EHR) at two regional health systems in Northeast Ohio, participants included 253,421 patients aged >60 years who had an outpatient primary care visit between January 1, 2005 and December 31, 2015. The date of the first qualifying visit served as the study baseline. Cumulative incidence of composite dementia outcome, defined as EHR‐documented dementia diagnosis or dementia‐related death, stratified by neighborhood socioeconomic deprivation (as measured by Area Deprivation Index) was determined by competing‐risk regression analysis, with non‐dementia‐related death as the competing risk. Fine‐Gray sub‐distribution hazard ratios were determined for neighborhood socioeconomic deprivation, race/ethnicity, and clinical risk factors. The degree to which neighborhood socioeconomic position accounted for racial/ethnic disparities in the incidence of composite dementia outcome was evaluated via mediation analysis with Poisson rate models. Results: Increasing neighborhood disadvantage was associated with increased risk of EHR‐documented dementia diagnosis or dementia‐related death (most vs. least disadvantaged ADI quintile HR = 1.76, 95% confidence interval = 1.69–1.84) after adjusting for age and sex. The effect of neighborhood disadvantage on this composite dementia outcome remained after accounting for known medical risk factors of dementia. Mediation analysis indicated that neighborhood disadvantage accounted for 34% and 29% of the elevated risk for composite dementia outcome in Hispanic and Black patients compared to White patients, respectively. Conclusion: Neighborhood disadvantage is related to the risk of EHR‐documented dementia diagnosis or dementia‐related death and accounts for a portion of racial/ethnic differences in dementia burden, even after adjustment for clinically important confounders. [ABSTRACT FROM AUTHOR]