Cognitive decline and hallucinations are common and debilitating non-motor symptoms, occurring during later phases of Parkinson’s disease (PD). Minor hallucinations (MH), appear at early phases and have been suggested to predict cognitive impairment in PD, however, this has not been well-established by clinical research. Here, we investigated whether non-demented PD patients with MH (without differences in frontal-subcortical and posterior cognitive function) show altered brain oscillations and whether such MH-related electrophysiological changes are associated with cognitive impairments that increase over time. Combining model-driven EEG analysis with neuropsychiatric and neuropsychological examinations in 75 PD patients, we reveal enhanced frontal theta oscillations in PD patients suffering from MH and link these oscillatory changes with lower cognitive frontal-subcortical functions. Neuropsychological follow-up examinations five years later revealed a stronger decline in frontal-subcortical functions in MH-patients anticipated by stronger frontal theta alterations measured during the first assessment, defining an MH and theta oscillation-based early marker of a cognitive decline in PD.