Dementia is a progressive disease associated with irreversible impairment and loss of cognitive abilities. About half of older people with dementia experience pain. In this paper, we propose that pain in older people with dementia can be conceptualized as the final result of the interaction of three heterogeneous phenomena, pain, aging, and dementia, which are created and influenced by the interactions of predisposing, lifelong, and current biopsychosocial factors. We review pain assessment in people with dementia using both self-report and observational/behavioral measures. We then review the biological/sensory, psychological (cognitive and affective) and social dimensions of pain in dementia. The available data suggest that dementia does not impact pain threshold or tolerance. To date, there is little research on the social dimension of pain in dementia. Changes in the affective domain in response to experimental pain have been contradictory with evidence supporting both increased and decreased unpleasantness and emotional responsiveness in people with dementia compared to healthy controls. Clinically, depression is a significant burden for older people with dementia and chronic pain. The relationship between pain and other neuropsychiatric symptoms is controversial, and there is insufficient evidence on which to base conclusions. Some of the most important dementia-related changes may arise in the cognitive domain, including impairments of semantic and episodic memory for pain, executive function, and pain anticipation. Changes in brain activation and interconnectivity support many of these conclusions. Despite methodological limitations, we conclude there are compelling preliminary data to support a biopsychosocial framework of pain and dementia. Future research directions, especially the need for improved assessment tools, are highlighted.