Little is known about the dyadic experience over time of people with dementia and their next of kin. The aim of this study was to investigate the state of mind of people with dementia, their next of kin’s experience of burden and satisfaction, and factors associated with these experiences over a 3-year period. The sample consisted of 32 people with dementia living at home with family caregivers in the south of Sweden. Data were collected during the period 2004–2007 and consisted of patients self reports (GDS), dementia nurse assessment (MMSE, Berger and ADL) and next-of-kin assessment (patient’s state of mind and care provision). Data also consisted of next-of-kin’s self reports concerning health, burden and satisfaction. The result showed that patients’ state of mind was mainly positive at baseline but a deterioration was seen over time in the patient’s mood and cognitive functioning together with an increase in ADL-dependency and suspected depression. Dependency in personal ADL entailed a higher risk of being in a negative state of mind. For next of kin the experience of burden increased while satisfaction decreased over the 3 years. The inter-relationship between the patients’ mood and the caregiver’s satisfaction and burden seems to get stronger over time. At baseline caregiver burden was mainly related to the next of kins’ general health and to patient behaviours that were difficult to handle. During the progression of the disease caregiver satisfaction becomes increasingly related to patient state of mind and dependency. There is, however, a need for more research focusing on the specific inter-relational aspects as previous studies have mainly focused on either the situation for the person with dementia or on the caregiver.