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Purpose: The purpose of this study was to identify the factors that affect quality of life in elderly people with dementia. Methods: The participants for this descriptive correlational study were 97 elderly patients with dementia who were attending a daycare center or were being cared for at home. Data were collected from the participants using the Mini-Mental Status Examination-Dementia Scale, the Geriatric Depression Scale (Short Form), Activity of Daily Living (ADL) and Instrumental Activities of Daily Living (IADL) Scale. Results: There were statistically significant differences in quality of life of elders with dementia according to mobility, using dementia day-care center, and cohabitation. In multiple regression analysis, depression, activity of daily of living, using dementia day-care centers and cohabitation were significant predictors of quality of life and the four variables explained 60% of the variance in quality of life. Conclusion: Findings indicate that to enhance the quality of life for elders with dementia, depression needs to be decreased and regular use of daycare service recommended. Further, various programs enhancing physical ability need to be developed and used with these elders. [ABSTRACT FROM AUTHOR]