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Neighbourhood density (N) has been shown to influence how lexical stimuli are accessed. In young adults, a large N is facilitatory for words but inhibitory for pseudowords in English. While there is a paucity of studies probing N as people age, results to date point towards changes in lexical processing that occur with aging. We are not aware of any studies that have sought to investigate N in Alzheimer’s disease (AD) in English. Results from the lexical decision task reported here support previous N findings for young adults. However, older adults and those with AD showed a different pattern of performance. Both were slower to respond to and made more errors to high versus low N pseudowords but, unlike young adults, older adult groups showed a decrease in sensitivity to N for words. Results suggest that the aging process may change how N is processed; older individuals are no longer as sensitive to N and this appears to be further altered by AD. In the context of the multiple read-out model of lexical processing, this change may be due to a longer time required to activate lexical neighbours which, in turn, results in differential N effects for words and pseudowords.