The study is based on analyzing 36 years of medical records for almost 2.8 million people in Denmark over age 50, looking at their histories of brain injuries, dementia and other medical conditions.
Even a single incidence of concussion was found to lead to a significantly higher risk (17 per cent) of dementia.
But a single severe brain injury increased the risk of later dementia by 35 percent compared with a person who never had brain trauma.
Overall, the risk of dementia was 24 percent higher for people with a traumatic brain injury compared with people without one.
They looked at the health records of 2.8 million people over 36 years and found that individuals who sustained a TBI in their 20s were 63 per cent more likely to develop dementia in the next three decades than someone who did not sustain one. Every year, more than 50 million people worldwide experience a TBI, which occurs when an external force disrupts the brain's normal function.
In a separate project, Irish researchers are now looking to recruit 100 adults - without dementia or any form of significant cognitive difficulty - for a large scale study which hopes to identify early signs of dementia years before memory loss and confusion develop.More news: Arizona, Texas prepare to send National Guard members to US-Mexico border
Dementia affects up to 55,000 people in Ireland and Alzheimer's disease is the most common cause of dementia, accounting for 60-70 per cent of all cases.
The findings also show that men with a history of TBI had a slightly higher risk of developing dementia than women.
But it would be advisable for people who had suffered a severe knock to the head - whether in a fall, vehicle accident, through contact sport, or an assault - to take extra precautions.
But independent experts said other lifestyle factors were more important.
Professor Tara Spires-Jones, from the University of Edinburgh, said the study "strongly supports the conclusion that TBI is associated with increased risk of dementia".
Prof Fann added: "Our findings do not suggest that everyone who suffers a traumatic brain injury will go on to develop dementia in later life".More news: Run This Town: Damian Lewis to play Toronto mayor Rob Ford
The potential link between TBI and dementia has become a pressing issue among military veterans and participants of contact sports such as boxing, football, soccer, and hockey.
While 85 per cent of the TBIs diagnosed were classed as mild, researchers said they are still likely to have been more serious concussions as the symptoms had to be severe or persistent enough to warrant a trip to hospital.
Previous research on links between brain injury and dementia has produced conflicting results, said the study authors writing in the journal The Lancet Psychiatry.
Fann said future research trying to narrow down why some people with brain injuries get dementia while other don't is important.
The researchers identified a cumulative effect, with dementia risk rising with repeated episodes of brain injury.More news: Our condolences to Jonny, who lost 'Wheel of Fortune' by mispronouncing 'flamenco'