Pretend that you live in New England. Given that fact alone, there is a good chance your dog has been exposed to Lyme disease. If you have been consistent with tick preventative, then that chance is decreased, but unfortunately still present. Own a cat that likes to wander outside and gets ticks? Not to worry, at least not about Lyme disease. Cats don't seem to develop clinical Lyme disease.
How do we figure out if a dog has Lyme disease? Turns out this isn't always straightforward. The most common diagnostic method is serology, ie looking for antibodies to various proteins associated with B burgdorferi in the blood. Currently available tests do not actually diagnose Lyme disease - they indicate exposure to the disease.
Also available if the blood is sent out is PCR analysis. However, false positives may occur because the test detects both live and dead organisms. Culture of affected areas (skin, muscle fascia, other areas) will definitively diagnose the organism, but culture is limited by long incubation times (2-4 weeks), expense, low sensitivity especially if antibiotics have been used, and the difficulty of sampling.
Serology testing for Lyme disease may happen in combination with the yearly heartworm test in endemic areas. It is a very common occurance for an otherwise healthy dog to have a positive Lyme test. So, what then? There is some controversy surrounding whether this dog with no clinical signs of disease should be treated with antibiotics or not. Most veterinarians tend to recommend not giving antibiotics for reasons including avoiding overuse of antibiotics and no proof that antibiotics actually clear the disease.
Clinical Lyme disease often manifests as fever and shifting leg lameness. In cases where a dog is presented with these clinical signs in a tick endemic area, serology testing can be informed by the clinical signs. With early treatment, clinical improvement should appear within 1-2 days. Rarely, infection with B burgdorferi can cause Lyme nephritis, which is usually fatal (however this has not been definitively proven.)