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The concept of the transitional object in human development was first proposed by Winnicott, and it has been extensively discussed in the child psychoanalytic literature. However, there are very few empirical studies on the transitional object in adult development. The transitional object has been discussed in relation to medical illness, medication, aggression, dreams, spirituality and religion, borderline personality disorder, anxiety disorder, fetishes, medication, and body image. There is very little literature on the transitional object in dementia. Dementia is a process of transition from a healthy, active state to a dependent state with progressive loss of memory, functional skills, and independence. Patients and families experience grief, loss, fear, anxiety, guilt, and anger. In this article, we address the role of the transitional object in dementia. We discuss the concepts of the transitional object and precursor object, and their possible role in interventions with patients and caregivers. We discuss various aspects of the therapeutic process and treatment setting, which may serve as transitional objects in various stages of dementia. The therapeutic relationship serves as the “holding environment” in which various transitions may be safely accomplished.