Alzheimer's disease (AD) is associated with widespread brain atrophy including structures subserving memory. We applied an improved structural detection methodology to examine the less well known progression of atrophy in early-stage AD. We sought to i) longitudinally study volumetric differences in patients with early-stage AD and healthy volunteers; and ii) test the hypothesis that hippocampal volumes would be correlated with clinically relevant cognitive function. Seven patients and eleven healthy subjects underwent two structural MRI scans and neuropsychological assessments. Scans were normalised to a study-specific template and 'morphologically opened' to reduce tissue misclassification. Using brain-parcellation, patient atrophy was localised to left fusiform and parahippocampal gyri, whilst left hippocampal volumes were correlated with a cognitive performance measure. A whole-brain search methodology, showed that patients had reduced volumes including fronto-temporal regions bilaterally, in hippocampi and amygdalae and right cerebellum. Whole-brain correlational analyses revealed that cognitive performance was correlated with volumes of both hippocampi, superior temporal gyri and left insula. Neither group exhibited significant longitudinal volumetric changes. Utilising a novel methodology, we have shown that in early-stage AD, clinically relevant cognitive deficits are correlated with regionally specific grey-matter volumes, which are detectable at an early stage of the illness.