The peripheral and central vestibular systems exhibit an age-related structural deterioration which may be responsible for vestibular reflex deficits and dizziness in the elderly. However, it seems likely that the central nervous system is capable of compensating for a certain degree of decline in function, since not all elderly people are impaired to the extent that the clinical signs of vestibular dysfunction are apparent. Dizziness and other vestibular disorders may develop only when the degree of deterioration of the vestibular system exceeds the ability of the nervous system to compensate. If dizziness does eventuate, it can have profound psychological consequences, particularly in terms of loss of confidence in independent activity, and may lead to the development of anxiety disorders. Vestibular rehabilitation programs may help to minimise the effects of age-related deterioration of the vestibular system and its psychological impact.