Years of completed education is a powerful correlate of performance on mental status assessment. This analysis evaluates differences in cognitive performance attributable to level of education and sex. We analyzed Mini-Mental State Examination responses from a large community sample (Epidemiologic Catchment Area study, N = 8,556), using a structural equation analytic framework grounded in item response theory. Significant sex and education group differential item functioning (DIF) were detected. Those with low education were more likely to err on the first serial subtraction, spell world backwards, repeat phrase, write, name season, and copy design tasks. Women were more likely to err on all serial subtractions, men on spelling and other language tasks. The magnitude of detected DIF was small. Our analyses show that failing to account for DIF results in an approximately 1.6% overestimation of the magnitude of difference in assessed cognition between high- and low-education groups. In contrast, nearly all (95%) of apparent sex differences underlying cognitive impairment are due to DIF. Therefore, item bias does not appear to be a major source of observed differences in cognitive status by educational attainment. Adjustments of total scores that eliminate education group differences are not supported by these results. Our results have implications for future research concerning education and risk for dementia.