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Introduction: A considerable segment of the elderly population in Iran is illiterate, and it seems the existing neuropsychological screening tests are not very useful for detecting dementia in illiterate participants. The purpose of this study was to develop and validate a tool called Persian test of Elderly for Assessment of Cognition and Executive function (PEACE) for detecting dementia in both illiterate and literate participants. Methods: First, in order to design some of the cognitive aspects of the PEACE assay, we considered other prevalent neuropsychological instruments, such as the General Practitioner assessment of Cognition (GPCOG), Functional Assessment Staging (FAST), Mini Mental State Examination (MMSE), and Wechsler Memory scale. The other domains of PEACE were designed according to our clinical proficiencies and the culture of the society. In the next step, the participants were classified into three distinct groups, i.e., the control group (n=33), the Mild Cognitive Impairment (MCI) group (n=30), and the Alzheimer’s group (n=38). All of the participants in each group were divided according to their educational level, i.e., illiterate, semi-literate, and literate. Results: We developed PEACE consisting of 14 items, each of which represents a specific cognitive function, with a maximum score of 91. The 14 items are Orientation, Praxis, Attention and Concentration, Attention and Calculation, Memory, Similarity, Abstract Thinking, General Information, Language, Judgment, Gnosis, Planning (Sequencing), Problem Solving, and Animal Naming. PEACE scores are highly correlated with those of the MMSE (r=0.78). The optimal cut-off point of PEACE chosen for diagnosis of Alzheimer’s disease was 67.5 (sensitivity: 75.8%, specificity: 97.4%). The PEACE scores showed a significant difference between Participants with Alzheimer’s disease and the control group (p=0.0000) and the MCI group (p=0.003). In addition, there was no significant difference between illiterate and literate participants in the Alzheimer’s group. However, the PEACE scores differed significantly (p=0.0000) between illiterate and literate participants in the control group. Conclusion: The PEACE addresses the limitations of existing tests and is appropriate for use in countries that have high rates of illiteracy. It is a valid screening mechanism for the detection of dementia in both illiterate and literate participants.