The aim of this exploratory randomized, placebo controlled study is to evaluate the efficacy of Circadin® 2mg in patients with mild to moderate Alzheimer Disease (AD) treated with the acetylcholinesterase (AChE) inhibitor. The effects of add-on Circadin® 2mg vs. placebo on the decline in cognitive skills and global functioning, as well as on daytime somnolence and will be assessed.

Inclusion Criteria:

1. Written informed consent as dictated by local legal circumstances.
2. Age range: adult patients between 50-85 years of age.
3. Gender: men and women. Women of child bearing potential or within two years of the menopause must have a negative urine pregnancy test at the Screening Visit.
4. A documented history of confirmed Alzheimer's disease
5. Dementia severity: MMSE score > 15,
6. Stable AChE inhibitor dose for 2 months prior to Screening visit.
7. Stable medications for non-excluded concurrent medical conditions for four weeks prior to the screening visit.
8. Stable doses of B12 and/or Folic acid supplements for at least 3 months prior to enrollment and throughout the study.
9. Cranial image: no evidence of focal disease to account for dementia (established by CT, PET or MRI). If there is no such available scan (CT, PET or MRI), one must be performed prior to enrollment.
10. Health: Physically acceptable for the study with no pathology likely to occur during or immediately after the study, as confirmed by medical history and exam and ECG.
11. Clinical laboratory values must be within normal limits, or judged not clinically significant by the investigator.
12. Residence: Stable home situation with no planned move during the 28-week investigational period.
13. A family member or a regular caregiver that will be available for visits and will ensure compliance. The caregiver must speak fluent Hebrew, Russian or English.
14. Ability to ingest oral medication and participate in all scheduled evaluations.
15. Ability to spend 2 daily hours outdoors exposed to sunlight.

Exclusion Criteria:

1. Severe agitation.
2. Unstable medical condition, mental retardation.
3. moderate to severe depression as defined by DSM-IV
4. Use of benzodiazepines or other hypnotics during the study and the preceding four weeks.
5. Use of Circadin® during the two weeks prior to study enrollment.
6. Pharmacological immunosuppression.
7. Participation in a clinical trial with any investigational agent within two months prior to study enrollment.
8. Alcoholism.
9. Known or suspected hypersensitivity to exogenous melatonin or melatonin receptor agonists.
10. Patients with rare hereditary problems of galactose intolerance, the LAPP lactose deficiency or glucose mal absorption.
11. Renal Failure with creatinine >150 micromol/l.
12. Hepatic Failure with ASAT; ALAT; GGT levels above three times the upper normal limit.
13. Clinically significant abnormal laboratory findings which have not been approved by the Safety Officer (sponsor)
14. Other serious diseases that could interfere with patient assessment.
15. Caregivers who are unwilling or unable to give informed consent or otherwise fulfill requirements of the study.
16. Untreated B12 and/or Folic acid deficiency.