The following tips are provided by the Alzheimer’s Association, the world’s leading voluntary health organization in Alzheimer’s care, support and research.  ©2013 Alzheimer’s Association, reused with permission.

When responding to hallucinations, be cautious. First, assess the situation and determine whether the hallucination is a problem for the person or for you.Offer reassurance.

Offer reassurance.

  • Respond in a calm, supportive manner. You may want to respond with, “Don’t worry. I’m here. I’ll protect you. I’ll take care of you.”
  • Gentle patting may turn the person’s attention toward you and reduce the hallucination.
  • Acknowledge the feelings behind the hallucination and try to find out what the hallucination means to the individual. You might want to say, “It sounds as if you’re worried” or “I know this is frightening for you.”

Use distractions.

  • Suggest a walk or move to another room. Frightening hallucinations often subside in well-lit areas where other people are present.
  • Try to turn the person’s attention to music, conversation or activities you enjoy together.

Modify the environment.

  • Check for sounds that might be misinterpreted, such as noise from a television or an air conditioner. 
  • Look for lighting that casts shadows, reflections or distortions on the surfaces of floors, walls and furniture. Turn on lights to reduce shadows.
  • Cover mirrors with a cloth or remove them if the person thinks that he or she is looking at a stranger.

Link: http://www.alz.org/care/alzheimers-dementia-hallucinations.asp