The Addenbrooke's Cognitive Examination III is one of the most widely used tests to assess cognitive impairment. Although previous studies have shown adequate levels of diagnostic utility to detect severe impairment, it has not shown sensitivity to detect mild decline. The aim of this study was to evaluate the psychometric properties of Addenbrooke's Cognitive Examination III in a large sample of elderly people through Item Response Theory, due to the lack of studies using this approach. A cross-sectional study was conducted with 1164 people from the age of 60 upwards, of which 63 had a prior diagnosis of Alzheimer dementia. The results showed that, globally, the Addenbrooke's Cognitive Examination III possesses adequate psychometrics properties. Furthermore, the information function test shows that the subscales have different sensitivity to different levels of impairment. These results can contribute to determining patterns of cognitive deterioration for the adequate detection of different levels of dementia. An optimized version is suggested which may be an economic alternative in the applied field.