The aim was to analyze the risk of hip fracture in German primary care patients with dementia. This study included patients aged 65–90 from 1072 primary care practices who were first diagnosed with dementia between 2010 and 2013. Controls were matched (1:1) to cases for age, sex, and type of health insurance. The primary outcome was the diagnosis of hip fracture during the three-year follow-up period. A total of 53,156 dementia patients and 53,156 controls were included. A total of 5.3% of patients and 0.7% of controls displayed hip fracture after three years. Hip fracture occurred more frequently in dementia subjects living in nursing homes than in those living at home (9.2% versus 4.3%). Dementia, residence in nursing homes, and osteoporosis were risk factors for fracture development. Antidementia, antipsychotic, and antidepressant drugs generally had no significant impact on hip fracture risk when prescribed for less than six months. Dementia increased hip fracture risk in German primary care practices.