Gait impairment is observed in patients with small vessel disease (SVD); however, the association between gait function and long-term outcome remains unclear. This study aimed to clarify the predictive value of gait function on incident dementia, survival and functional outcome. Data were derived from a Japanese cohort of patients with SVD. This study included 522 participants who underwent 3-m timed up and go test (TUG), and gait speed, TUG time, was divided into tertiles. Magnetic resonance imaging was used to evaluate severity of white matter hyperintensities, lacunes, and medial temporal atrophy. Primary outcome was dementia. All-cause death and functional outcome by modified Rankin scale at the last visit was also evaluated. The median age was 71 years, and median TUG time was 9.91 s. During follow-up period of 4.8 years, 32 cases of dementia occurred. Cox proportional hazard analysis revealed that slow gait speed (TUG time > 10.88 s) was associated with a significantly higher risk of incident dementia than fast (TUG time < 9.03) and middle (TUG time, 9.04-10.87 s) speeds after adjusting risk factors, Mini-Mental State Examination, SVD severity and brain atrophy (adjusted hazard ratio, 2.73; 95% confidence interval, 1.16-6.42, p = 0.022). Slow speed was also associated with mortality and poor functional outcome compared with other speeds (adjusted odds ratio, 4.19; 95% confidence interval 1.92-9.18, p < 0.001). Gait function was associated with incident dementia, mortality and poor functional outcome independently of cognitive function, brain atrophy, and SVD severity.