Abstract Background Cross-sectional evidence indicates that certain personality traits may influence how well people with dementia and their caregivers are able to live alongside the condition. However, no studies to date have explored these associations longitudinally. The present study aimed to explore whether each of the Five-Factor personality traits were associated with change over two years in perceptions of ‘living well’ for people with dementia and their caregivers. ‘Living well’ was conceptualized as a composite of quality of life, satisfaction with life, and subjective well-being. Methods Data were analyzed from 1487 people with dementia and 1234 caregivers who took part in the IDEAL cohort. Participants were categorized into low, medium, and high groups for each trait using stanine scores. Latent growth curve models investigated associations between these groups and ‘living well’ scores for each trait at baseline and at 12 and 24 months. Covariates included cognition in people with dementia and stress in caregivers. A Reliable Change Index was calculated against which to evaluate changes in ‘living well’ scores over time. Results At baseline, neuroticism was negatively associated with ‘living well’ scores for people with dementia, while conscientiousness, extraversion, openness, and agreeableness were positively associated. For caregivers, neuroticism was negatively associated with ‘living well’ scores at baseline while conscientiousness and extraversion were positively associated. ‘Living well’ scores were mostly stable over time with no influence of personality traits on observed changes. Conclusions Findings suggest that personality traits, particularly neuroticism, have a meaningful impact on how people with dementia and caregivers rate their capability to ‘live well’ at baseline. Over time ‘living well’ scores for each personality trait group were largely stable. Studies utilizing longer follow-up periods and more appropriate measures of personality are needed to corroborate and extend the findings of the present study.