Objectives: Little is known regarding the cognitive and behavioral status of patients with dementia and their caregivers in lower middle-income countries during the COVID-19 pandemic. This study aimed to understand the impact of the pandemic on persons with dementia and their caregivers in India. Methods: This was an observational study. A cohort of 66 persons with dementia and their caregivers were evaluated during the COVID-19 pandemic in 2 specialist hospitals in South India. Caregivers were interviewed at 2 distinct time points of the pandemic: during the national lockdown and 5 months after during later periods of the “cluster of cases” transmission phase. Participants were assessed via telephone utilizing validated instruments (Neuropsychiatric Inventory [NPI], Clinical Dementia Rating [CDR] Scale, and Depression, Anxiety and Stress Scale [DASS-21]) and a semi-structured questionnaire. The questionnaire documented sociodemographic information, clinical history, infection measures adopted, changes in caregiving routines, involvement in functional rehabilitation activities, and access to medical and long-term care support services. Results: The 2-phase follow-up study found a significant worsening of behavior in dementia patients, demonstrated by a difference in the NPI sub-domain scores for anxiety (mean difference [standard deviation, SD] = −0.552 [1.993], t<sub>58</sub> = −2.109, p = 0.039) and eating disturbances (mean difference [SD] = −1.121 [2.493], t<sub>59</sub> = −3.424, p = 0.001). A relatively high proportion of patients developed anxiety (cumulative incidence = 24.53%) and eating disturbances (cumulative incidence = 26.92%), without having these symptoms at baseline. There was a trend toward an increase in proportion of persons with severe dementia (19.7% vs. 39.4%) on follow-up. Caregiver distress reported was significantly associated with neuropsychiatric symptoms (r = 0.712, p < 0.001) and dementia severity (ρ = 0.365, p = 0.004). In addition, difficulties in accessing medical care persisted between the 2 assessments, and there were statistically significant differences between functional rehabilitation activities such as indoor activities (p < 0.001), outdoor activities (p = 0.013), and physical exercises (p = 0.003) between baseline and follow-up. Conclusion: Findings suggest interruption of functional rehabilitation activities and disruption in medical care services are likely to have had an adverse impact on patients with dementia and contributed toward caregiver distress.