The present invention provides a process for preparing donepezil or a salt thereof, the process comprising reducing a 1-benzyl-4-[(5,6-dimethoxy-1-indanon-2- yl)methylene]pyridonium halide of formula (II), wherein X is bromide or chloride, in the presence of an ionic compound, a solvent, a catalyst and a source of hydrogen, to form donepezil and optionally converting the donepezil to the salt thereof.