The study, being led by Professor Clive Holmes at the University of Southampton, will monitor 140 people aged over 50 with mild cognitive impairment during an 18-month period.
The participants will be assessed for levels of stress and any progression from mild cognitive impairment to dementia.
About 60% of people with mild cognitive impairment are known to go on to develop Alzheimer's.
Prof Holmes said: "All of us go through stressful events. We are looking to understand how these may become a risk factor for the development of Alzheimer's.
"Something such as bereavement or a traumatic experience - possibly even moving home - is also a potential factor.
"This is the first stage in developing ways in which to intervene with psychological or drug-based treatments to fight the disease.
"We are looking at two aspects of stress relief - physical and psychological - and the body's response to that experience."
The study is part of a Â£1.5 million package of six grants being given by the charity to find the cause of the disease, a cure and a way to prevent it.
Alzheimer's Society research manager Anne Corbett said: "We feel this is a really important area of research that needs more attention. The results could offer clues to new treatments or better ways of managing the condition."