Objectives: The aim of this study was to explore caregiving self-efficacy as a mediator for the association between family functioning and caregiving appraisal of dementia family caregivers in Taiwan. Method: This study adopted a cross-sectional correlational design. Purposive sampling was used to recruit 115 dyads of dementia patients and family caregivers from the outpatient neurological clinics of two hospitals in northern Taiwan. Data were gathered through interviews with a structured questionnaire, which included demographic characteristics for caregivers and patients, family functioning, caregiving self-efficacy, as well as positive and negative aspects of caregiving appraisal. Results: Family functioning, patients' activities of daily living score, Neuropsychiatric Inventory caregiver distress, and three domains of self-efficacy were significantly associated with caregiver burden. Hierarchical multiple regression analyses indicated that self-efficacy for obtaining respite (SE-OR) significantly explained 20.5% of the variance in caregiver esteem. Caregiver perceived worsened health status, family functioning, and SE-OR significantly explained 59% of the variance in caregiver burden. The mediation test only supported the partially mediating role of SE-OR on the relationship between family functioning and caregiver burden, while the mediating effect of self-efficacy for responding to disruptive behaviours and controlling upsetting thoughts were insignificant. Conclusion: Our findings provided preliminary evidence for health professionals recommending that future studies should assess the family dynamic and health problems of caregivers, and develop appropriate family-centred interventions that focus on strengthening interfamily support and respite services to alleviate caregiver burden.