Using neuropsychological investigation and visual event-related potentials (ERPs), we aimed to compare the ERPs and cognitive function of nondemented Parkinson's disease (PD) patients with and without visual hallucinations (VHs) and of control subjects. We recruited 12 PD patients with VHs (PD-H), 23 PD patients without VHs (PD-NH), and 18 age-matched controls. All subjects underwent comprehensive neuropsychological assessment and visual ERPs measurement. A visual odd-ball paradigm with two different fixed interstimulus intervals (ISI) (1600 ms and 5000 ms) elicited visual ERPs. The frontal test battery was used to assess attention, visual-spatial function, verbal fluency, memory, higher executive function, and motor programming. The PD-H patients had significant cognitive dysfunction in several domains, compared to the PD-NH patients and controls. The mean P3 latency with ISI of 1600 ms in PD-H patients was significantly longer than that in controls. Logistic regression disclosed UPDRS-on score and P3 latency as significant predictors of VH. Our findings suggest that nondemented PD-H patients have worse cognitive function and P3 measurements. The development of VHs in nondemented PD patients might be implicated in executive dysfunction with altered visual information processing.