As physical restraints should only be used in exceptional cases, there is an urgent need for alternatives to restraint use. Surveillance technology could be such an alternative. This study explored whether nursing-home residents with dementia subjected to surveillance technology had better quality of life scores for mood, behavioral and societal dimensions than residents with physical restraints. Quality of life was assessed longitudinally, with three measurements in six psychogeriatric nursing homes of residents with surveillance technology (n = 170) and residents with physical restraints (n = 22). QUALIDEM subscales were used to measure five dimensions of quality of life. Multilevel longitudinal univariate and multivariate regression techniques were used to analyze the data. Because physical restraints were almost exclusively used in residents with low activities of daily living (ADL) independency (18 of the 22), we restricted the regression analyses to residents with a Barthel Index score ≤ 5 (overall n = 53). Univariate results showed that highly ADL-dependent residents with surveillance technology had significantly more positive affect than highly ADL-dependent residents with physical restraints. However, this difference proved to be no longer significant after adjustment for the confounders: age, sex and stage of dementia. Quality of life of highly ADL-dependent nursing-home residents with dementia seems to be unrelated to the use of surveillance technology as opposed to physical restraints.