Such tests could be important if scientists find ways to slow or stop Alzheimer's and the severe memory loss associated with it. For now, there's no cure for the more than 5 million Americans with the disease.
Researchers have long known that microscopic lesions considered the hallmarks of Alzheimer's first appear in a brain region important to the sense of smell.
"Strictly on the basis of anatomy, yeah, this makes sense," said Robert Franks, an expert on odor perception and the brain at the University of Cincinnati. Franks was not involved in the new study, appearing in Monday's Archives of General Psychiatry.
Other studies have linked loss of smell to Alzheimer's, Franks said, but this is the first to measure healthy people's olfactory powers and follow them for five years, testing along the way for signs of mental decline.
In the study, 600 people between the ages of 54 and 100 were asked to identify a dozen familiar smells: onion, lemon, cinnamon, black pepper, chocolate, rose, banana, pineapple, soap, paint thinner, gasoline and smoke.
For each mystery scent, they heard and saw a choice of four answers. For cinnamon, they were asked aloud: "Fruit? Cinnamon? Woody? Or coconut?" while also seeing the choices in text.
A quarter of the people correctly identified all the odors or missed only one. Half of them knew at least nine of the 12. The lowest-scoring quarter of the people correctly identified eight or fewer of the odors.
The subjects took 21 cognitive tests annually over the next five years. About one-third of the people developed at least mild trouble with memory and thinking.
The people who made at least four errors on the odor test were 50 percent more likely to develop problems than people who made no more than one error. Difficulty identifying odors also was associated with a higher risk of progressing from mild cognitive impairment to Alzheimer's.
The researchers took into account age, gender, education and a history of strokes or smoking, and still found lower scores predicted higher risk of cognitive decline.
Lead author Robert Wilson of Chicago's Rush University Medical Center said a diminishing sense of smell isn't cause for panic.
"Not all low scorers went on to have cognitive problems," Wilson said.
Older people should report a loss in smell to their doctors, said Claire Murphy, an Alzheimer's researcher at San Diego State University who was not involved in the new study. The problem could be caused by a polyp in the nose or infected sinuses, she said.
"If a person is old and has a very good sense of smell, that's a very good sign," Murphy said.
The study was funded by the National Institute on Aging and the Illinois Department of Public Health.