To test whether the Tailored Activity Program (TAP) reduces dementia-related neuropsychiatric behaviors, promotes activity engagement, and enhances caregiver well-being. Prospective, two-group (treatment, wait-list control), randomized, controlled pilot study with 4 months as main trial endpoint. At 4 months, controls received the TAP intervention and were reassessed 4 months later. Patients' homes. Sixty dementia patients and family caregivers. The eight-session occupational therapy intervention involved neuropsychological and functional testing, selection, and customization of activities to match capabilities identified in testing, and instruction to caregivers in use of activities. Behavioral occurrences, activity engagement, and quality of life in dementia patients; objective and subjective burden and skill enhancement in caregivers. At 4 months, compared with controls, intervention caregivers reported reduced frequency of problem behaviors, and specifically for shadowing and repetitive questioning, and greater activity engagement including the ability to keep busy. Fewer intervention caregivers reported agitation or argumentation. Caregiver benefits included fewer hours doing things and being on duty, greater mastery, self-efficacy, and skill enhancement. Wait-list control participants following intervention showed similar benefits for reductions in behavioral frequency and caregiver hours doing things for the patient and mastery. Caregivers with depressed symptoms derived treatment benefits similar to nondepressed caregivers. Tailoring activities to the capabilities of dementia patients and training families in activity use resulted in clinically relevant benefits for patients and caregivers. Treatment minimized trigger behaviors for nursing home placement and reduced objective caregiver burden. Noteworthy is that depressed caregivers effectively engaged in and benefited from the intervention.