Impairments in spatial processing due to hippocampal degeneration have been observed in the years immediately preceding the diagnosis of Alzheimer's disease (AD) dementia. The demonstration of changes in spatial processing in preceding decades would provide a cognitive marker for pre-clinical AD and an outcome measure for early intervention trials. The present study examined allocentric and egocentric spatial processing in relation to future dementia risk in a middle-aged cohort. The CAIDE Dementia Risk Score (DRS) was calculated for 188 persons aged 40 to 59, of whom 94 had a parent with dementia. Participants underwent the Four Mountains Test (4MT) of allocentric spatial processing, the Virtual Reality Supermarket Trolley Task (VRSTT) of egocentric spatial processing, and 3T MRI scans. A significant negative association was found between the DRS and 4MT (Spearman correlation - 0.26, p = 0.0006), but not with the VRSTT. The 4MT was also found to be a better predictor of risk than tests of episodic memory, verbal fluency, or executive functioning. The results suggest that allocentric rather than egocentric processing may be a potential indicator of risk for late-onset AD, consistent with the hypothesis that the earliest cognitive changes in AD are driven by tau-related degeneration in the medial temporal lobe rather than amyloid-only deposition in the medial parietal lobe.