Dementia is an increasingly important public health problem with various risk factors. Respiratory function, measured via peak expiratory flow (PEF), may be a modifiable dementia risk factor. We investigated the association between PEF and incident dementia in 5 935 older adults from the National Health and Aging Trends Study (NHATS) from 2011 to 2014. Baseline PEF, expressed as a standardized residual (SR) percentile, was analyzed as a predictor of incident dementia using discrete-time proportional hazards models, while controlling for several health and sociodemographic covariates. After 14 332 person-years of follow-up, 9.0% (N = 536) had incident cases of dementia. Compared to the lowest PEF category (SR-percentile < 10%), the highest PEF category (SR-percentile ≥ 80%) had 49% lower risk of incident dementia (hazard ratio [HR] = 0.51; 95% confidence interval [CI; 0.37, 0.71]), and the second highest PEF category (SR-percentile 50%-80%) had 25% lower risk of incident dementia (HR = 0.75; 95% CI [0.56, 1.00]). A sensitivity analysis using multiple imputation to account for missing PEF measurements yielded similar associations with incident dementia. These associations suggest a dose-dependent relationship such that higher PEF categories were more protective against incident dementia. PEF may be considered as an easily administered, low-cost measure of respiratory function and a potentially modifiable dementia risk factor. Improving PEF may reduce dementia risk through vascular mechanisms, such as increased brain oxygenation. Future research should explore potential causal pathways between PEF and dementia.