Objective To date, data regarding the efficacy of acetylcholinesterase inhibitors in preventing postoperative delirium (POD) are inconsistent and conflicting. Older individuals with cognitive dysfunction are thought to show POD more frequently. Our aim was to study the effectiveness of rivastigmine prophylaxis on the incidence, severity, and risk factors for POD in older patients with cognitive impairment undergoing hip fracture surgery. Methods Of 62 older patients with cognitive impairment about to undergo surgery after a hip fracture, 31 were randomly assigned to receive a rivastigmine patch from 3 days before to 7 days after the operation (Group I), and the other 31 did not receive a rivastigmine patch (Group II). The two groups were compared with regard to incidence and severity of delirium on postoperative days 2 or 3 and 7. Multivariate logistic regression analysis was performed to assess factors associated with POD. Results Postoperative delirium occurred in five Group I patients and 14 Group II patients (p = 0.013). The mean severity of delirium in the two groups as determined by the Delirium Rating Scale was 2.2 and 6.2 respectively (p = 0.033). The odds ratio for POD was 0.259 (95% CI: 0.074–0.905, p = 0.034) after adjusting for American Society of Anesthesiologists score (p = 0.058), age (p = 0.203), and gender (p = 0.560). There were no rivastigmine‐related perioperative complications. Conclusion Perioperative rivastigmine patch application could reduce the occurrence of POD in older patients with low cognitive status. Copyright © 2016 John Wiley & Sons, Ltd.