Objective This study aimed to examine the association between normal-but-low folate levels and cognitive function in the elderly population using a prospective cohort study. Methods We analyzed 3,910 participants whose serum folate levels were within the normal reference range (1.5–16.9 ng/mL) at baseline evaluation in the population-based prospective cohort study named the “Korean Longitudinal Study on Cognitive Aging and Dementia.” The association between baseline folate quartile categories and baseline cognitive disorders [mild cognitive impairment (MCI) or dementia] was examined using binary logistic regression analysis adjusting for confounding variables. The risks of incident MCI and dementia associated with the decline of serum folate level during a 4-year follow-up period were examined using multinomial logistic regression analysis. Results The lowest quartile group of serum folate (≥1.5, ≤5.9 ng/mL) showed a higher risk of cognitive disorders than did the highest quartile group at baseline evaluation (odds ratio 1.314, p=0.012). Over the 4 years of follow-up, the risk of incident dementia was 2.364 times higher among subjects whose serum folate levels declined from the 2nd–4th quartile group to the 1st quartile than among those for whom it did not (p=0.031). Conclusion Normal-but-low serum folate levels were associated with the risk of cognitive disorders in the elderly population, and a decline to normal-but-low serum folate levels was associated with incident dementia. Maintaining serum folate concentration above 5.9 ng/mL may be beneficial for cognitive status.