The authors sought to directly examine compromises in the semantic system in mild cognitive impairment and their possible relationship to everyday functional competencies. Study participants were 25 patients who met criteria for amnestic mild cognitive impairment, 27 patients with mild or moderate Alzheimer's disease, and 70 healthy comparison subjects. The authors administered a novel semantic distance task in which participants make decisions about word or image stimuli that correspond to real-world entities that differ in physical size. The authors also administered a performance-based measure of everyday functional competence. Participants in the mild cognitive impairment and Alzheimer's groups were consistently less accurate and slower than healthy comparison subjects in semantic decisions in which words were used as stimuli. When these participants had to make more fine-grained decisions about the semantic attribute of size, their performance in accuracy and reaction time disproportionately worsened relative to that of comparison subjects. In image-based conditions in which line drawings were used as stimuli, sensory-perceptual information (i.e., the size of the drawings themselves) had undue influence over semantic knowledge judgments in the mild cognitive impairment and Alzheimer's groups. Performance in the semantic distance task was a strong and significant predictor of everyday functional competence in the mild cognitive impairment and Alzheimer's groups. This study synthesized several distinct strands in the mild cognitive impairment literature by providing evidence for 1) compromises in the semantic system in mild cognitive impairment, not confounded by overt retrieval or refractory access; 2) intrusion of perceptual information on semantic processing; and 3) a robust relation between semantic corruption and difficulties in everyday functioning.