Objectives Long-term use of anticholinergic medication in older people is associated with increased risk of cognitive decline and mortality, but this relationship could be confounded by the underlying illness the drugs are treating. To investigate associations between central anticholinergic antidepressants or antipsychotics and mortality, hospitalisation and cognitive decline in people with dementia. Method In cohorts of patients with a dementia diagnosis receiving antidepressant and/or antipsychotic medication (N = 4,380 and N = 2,335 respectively), assembled from a large healthcare database, central anticholinergic burden scores were estimated using the Anticholinergic Effect on Cognition (AEC) scale. Data were linked to national mortality and hospitalisation data sources, and Mini-Mental State Examination (MMSE) scores were used to investigate cognitive decline. Results There was a reduced mortality risk in people receiving agents with high central anticholinergic burden compared to those with no or low burden which was statistically significant in the antidepressant cohort (Hazard ratio (HR): 0.88; 95% confidence interval (CI): 0.79-0.98; p = 0.023) but not the antipsychotic one (HR: 0.91; 95% CI: 0.82-1.02; p = 0.105). Patients on antidepressants with no central anticholinergic burden had accelerated cognitive decline compared with other groups, whereas no differences were found in the antipsychotic cohort. No significant associations were detected between antidepressant or antipsychotic-related central anticholinergic burden and hospitalisation. Conclusion These counter-intuitive findings may reflect factors underlying the choice of psychotropics rather than the agents themselves, although do not support a strong role for central anticholinergic drug actions on dementia outcomes. Further studies, including randomized switching of agents are needed to clarify this relationship.