Abstract INTRODUCTION White matter lesions on fluid‐attenuated inversion recovery magnetic resonance imaging (FLAIR‐MRI) reflect small vessel disease (SVD) and aid in identifying vascular contributions to impairment and dementia (VCID). Emerging diffusion MRI (dMRI) biomarkers are sensitive to early SVD but the lack of validated approaches for defining dMRI abnormality has limited their clinical utility. METHODS In 3934 participants (8749 observations) from a population‐based sample, we classified 9% as vascular cognitive impairment versus not (VCI+/VCI−) using abnormal FLAIR‐MRI and cognitive testing. We evaluated four distinct dMRI positivity criteria and assessed performance in an independent clinical sample. RESULTS The young referent criterion performed best and yielded an estimated prevalence of dMRI positivity aligned with pathology literature. About 40% of the population were dMRI positive, and these individuals had lower baseline cognition and faster longitudinal decline. Cutpoints were validated in an independent clinical sample. DISCUSSION The proposed dMRI abnormality framework can detect VCID and aid in identification of individuals at risk of VCI.