With advancing age, an increased visibility of perivascular spaces (PVSs) on magnetic resonance imaging (MRI) is hypothesized to represent impaired drainage of interstitial fluid from the brain and may reflect underlying cerebral small vessel disease (SVD). However, whether large perivascular spaces (L-PVSs) (>3 mm in diameter) visible on MRI are associated with SVD and cognitive deterioration in older individuals is unknown. To examine whether L-PVSs are associated with the progression of the established MRI markers of SVD, cognitive decline, and increased risk of dementia. The prospective, population-based Age, Gene/Environment Susceptibility-Reykjavik Study assessed L-PVSs at baseline (September 1, 2002, through February 28, 2006) on MRI studies of the brain in 2612 participants. Participants returned for additional MRI from April 1, 2007, through September 30, 2011, and underwent neuropsychological testing at the 2 time points a mean (SD) of 5.2 (0.2) years apart. Data analysis was conducted from August 1, 2016, to May 4, 2017. The presence, number, and location of L-PVSs. Incident subcortical infarcts, cerebral microbleeds, and progression of white matter hyperintensities detected on MRI; cognitive decline defined as composite score changes between baseline and follow-up in the domains of memory, information processing speed, and executive function; and adjudicated incident dementia cases diagnosed according to international guidelines. Of the 2612 study patients (mean [SD] age, 74.6 [4.8] years; 1542 [59.0%] female), 424 had L-PVSs and 2188 did not. The prevalence of L-PVSs was 16.2% (median number of L-PVSs, 1; range, 1-17). After adjusting for age, sex, and interval between baseline and follow-up scanning, the presence of L-PVSs was significantly associated with an increased risk of incident subcortical infarcts (adjusted risk ratio, 2.54; 95% CI, 1.76-3.68) and microbleeds (adjusted risk ratio, 1.43; 95% CI, 1.18-1.72) and a greater 5-year progression of white matter hyperintensity volume. The presence of L-PVSs was also associated with a steeper decline in information processing speed and more than quadrupled the risk of vascular dementia. All associations persisted when further adjusted for genetic and cerebrovascular risk factors. The associations with cognitive outcomes were independent of educational level, depression, and other SVD MRI markers. Large PVSs are an MRI marker of SVD and associated with the pathogenesis of vascular-related cognitive impairment in older individuals. Large PVSs should be included in assessments of vascular cognitive impairment in the older population and as potential targets for interventions.