The aim of this article is to present a model of dementia friendly environments. This model is based on the concept of affordances which refers to how the environment provides positive or negative possibilities for action and how these possibilities are actualised. By environment we mean both physical and psychosocial aspects of living environment. We present criteria for environment which is enabling and supports personhood and divide these criteria under five aspects. Because people with moderate and severe dementia are dependent on the people assisting and caring for them we present a model how the moderating role of carers and the physical and material environment are intertwined. At the end of the paper we present our empirical findings on how the features of environment and moderating role of carers are associated with wellbeing of people with dementia.