Objectives Psychotherapy provides a means of helping participants to resolve emotional threats and play an active role in their lives. Consequently, psychotherapy is increasingly used within dementia care. This paper reviews the existing evidence base for individual and group psychotherapy with people affected by dementia. Design The protocol was registered. We searched electronic databases, relevant websites and reference lists for records of psychotherapy with people affected by Alzheimer's Disease, Vascular dementia, Lewy‐body dementia or a mixed condition between 1997 and 2015. We included studies of therapies which met British Association of Counselling and Psychotherapy definitions (e.g. occurs regularly, focuses on talking about life events and facilitates understand of the illness). Art therapy, Cognitive Stimulation and Rehabilitation, Life Review, Reminiscence Therapy and family therapy were excluded. Studies which included people with frontal–temporal dementia and mild cognitive impairment were excluded. Data was extracted using a bespoke form, and risk of bias assessments were carried out independently by both authors. Meta‐analysis was not possible because of the heterogeneity of data. Results A total of 1397 papers were screened with 26 papers using randomised, non‐randomised controlled trials or repeated measured designs being included. A broad mix of therapeutic modalities, types, lengths and settings were described, focussing largely on people with mild levels of cognitive impairment living in the community. Conclusions This study was limited to only those studies published in English. The strongest evidence supported the use of short‐term group therapy after diagnosis and an intensive, multi‐faceted intervention for Nursing Home residents. Many areas of psychotherapy need further research. Copyright © 2016 John Wiley & Sons, Ltd.