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People with dementia's (PwD) performance of activities of daily living (ADLs) relates to what the PwD does in their daily routine, while their ability to complete tasks refers to what they could potentially do. The World Health Organization (WHO) launched the International Classification of Functioning, Disability and Health (ICF) (WHO, 2001) which highlighted the importance of identifying the gap between performance and ability to complete tasks and to consider how different factors contribute to disability, to make adjustments and promote participation. Although several studies have examined how intrinsic factors affect the performance and potential ability to carry out ADLs, very few of them have investigated the role of extrinsic factors, including both the physical and the human environment (represented by the primary carer), in PwD's ADL functioning. Using the ICF model, this thesis aimed to investigate the role of both intrinsic and extrinsic factors on PwD's ADL functioning, and how they may explain the gap that exists between the performance of ADLs and the actual ability to perform them. A mixed-methods approach was used to address the research questions. The first study used an experimental design to investigate the role of the environment in PwD's ability to perform ADLs. Results showed that PwD performed better at home, even though the level of clutter was higher in their home environment than in the research-lab. Cognition was the only factor that predicted better functioning. The second study investigated how the combination of both intrinsic (cognition and apathy) and extrinsic factors (carer's style) affected ADLs in PwD. Apathy levels and carer's use of criticism style negatively affected ADL performance, while cognition and carer's use of encouragement style improved performance of daily tasks. The next study investigated how the human environment affected the discrepancy between the reported and the observed ADL performance. Results showed a high disagreement between performance and ability to perform ADLs in PwD, and the carer's use of encouragement and active management style were the factors that predicted this discrepancy. The final study used a qualitative approach to identify the types of assistance provided by carers, when the PwD performs a task. Five different themes were identified, and the findings suggested that the types of assistance used by carers could either enhance or hinder ADL performance of PwD. This thesis has shown that ADL functioning in PwD is affected by both the human and the physical environment and has revealed how the combination of extrinsic and intrinsic factors contributes to the changes in task performance of PwD. This work has confirmed the important role extrinsic factors play in shaping disability and that disability does not depend exclusively on disease-related factors. The findings provide evidence to support the development of multi-component non-pharmacological interventions that aim to reduce the gap between performance and ability to perform ADLs in PwD.