An international team, led by Dr David Llewellyn at the University of Exeter Medical School, found that study participants who were severely Vitamin D deficient were more than twice as likely to develop dementia and Alzheimer's disease.
The researchers studied elderly Americans who took part in the Cardiovascular Health Study.
They discovered that adults who were moderately deficient in vitamin D had a 53 per cent increased risk of developing dementia of any kind, and the risk increased to 125 per cent in those who were severely deficient.
Similar results were recorded for Alzheimer's disease, with the moderately deficient group 69 per cent more likely to develop this type of dementia, jumping to a 122 per cent increased risk for those severely deficient.
The study looked at 1,658 adults aged 65 and over, who were able to walk unaided and were free from dementia, cardiovascular disease and stroke at the start of the study.
The participants were then followed for six years to investigate who went on to develop Alzheimer's disease and other forms of dementia.
"We expected to find an association between low Vitamin D levels and the risk of dementia and Alzheimer's disease, but the results were surprising - we actually found that the association was twice as strong as we anticipated," Llewellyn said.
"Clinical trials are now needed to establish whether eating foods such as oily fish or taking vitamin D supplements can delay or even prevent the onset of Alzheimer's disease and dementia.
"We need to be cautious at this early stage and our latest results do not demonstrate that low vitamin D levels cause dementia. That said, our findings are very encouraging, and even if a small number of people could benefit, this would have enormous public health implications given the devastating and costly nature of dementia," said Llewellyn.
Dementia is one of the greatest challenges of our time, with 44 million cases worldwide a number expected to triple by 2050 as a result of rapid population ageing, researchers said.
A billion people worldwide are thought to have low vitamin D levels and many older adults may experience poorer health as a result, they said.
Previous research established that people with low vitamin D levels are more likely to go on to experience cognitive problems, but this study confirms that this translates into a substantial increase in the risk of Alzheimer's disease and dementia.
The study was published in the journal Neurology.