Researchers from Edinburgh University have joined forces with teams from seven other universities and industry experts from pharmaceutical and biotech companies to form the UK Dementia Platform (UKDP).
The group aims to improve detection, treatment and ultimately prevention of dementia by looking at the disease in the context of the whole body and not only the brain.
The announcement comes as Prime Minister David Cameron warned more must be done to address a "market failure" on dementia research and drug development as health and finance experts gathered in London to discuss the burden of dementia on people around the world.
The UKDP will study data from two million volunteers aged 50 and over who have taken part in existing research projects such as UK Biobank, a long-term national health study.
Professor Ian Deary, director of the Centre for Cognitive Ageing and Cognitive Epidemiology, said that looking at dementia "in the context of the whole body" was an approach that he hoped would yield "significant breakthroughs in this larger setting".
Participants in these studies have already provided a wealth of medical and lifestyle data that experts will examine alongside ongoing genetic studies, brain imaging and tests of mental skills.
The aim is to identify biological changes and shifts in thinking abilities that are linked to the condition.
It is hoped this could lead to earlier detection and improved monitoring of dementia and will help inform better ways of testing new treatments.
There are approximately 88,000 people with dementia in Scotland, 3,200 of whom are under 65. The Scottish Government has set up a national strategy to deal with the disease, and predicts the number of sufferers will double over the next 25 years
Four of the 14 UKDP group leaders who will steer the project are from Edinburgh University, including scientists from the Centre for Cognitive Ageing and Cognitive Epidemiology, the Alzheimer Scotland Dementia Research Centre, the Centre for Clinical Brain Sciences and The Roslin Institute.
Researchers hope to gain a better understanding of who is at risk of developing dementia, possible triggers for the disease, and what might speed or slow its progress.
Data from the project will be made available to scientists around the world in a bid to accelerate progress in dementia research and encourage innovation.
Professor Cathie Sudlow of the Centre for Clinical Brain Sciences, who is also Chief Scientist at UK Biobank, added: "This initiative has the potential to make a significant global impact in the battle against dementia."
The project was announced by David Cameron at the dementia summit in London, which is the first conference since experts set a global ambition to find a cure for dementia by 2025.
Mr Cameron said: "The truth is that dementia now stands alongside cancer as one of the greatest enemies of humanity," he will say.
"In the UK alone there are around 800,000 people living with dementia. Worldwide that number is 40 million - and it is set to double every 20 years. We have to fight to cure it. I know some people will say that it's not possible, but we have seen with cancer what medicine can achieve."