Purpose: To gain a better understanding of how actual and perceived incongruence of care preferences affects the psychosocial well-being of persons with dementia and their family caregiver. Design and Methods: In-depth interviews were conducted with 128 dyads each consisting of a person with dementia and a family caregiver. Baseline data from an intervention study were used to examine the relationship between the caregiver's care-related preferences, the person with dementia's care-related preferences, and the caregiver's perception of the person with dementia's preferences. Preferences for three care-related domains were recorded: personal activities of daily living (PADLs), instrumental activities of daily living (IADLs), and socioemotional issues. Primary outcomes included dyadic relationship strain, quality of life, and mood for both the caregiver and person with dementia. Results: Perceived incongruence of care preferences was a better predictor of negative psychosocial outcomes than actual incongruence. Actual incongruence for socioemotional care preferences was a predictor of greater relationship strain and worse mood for the person with dementia, whereas perceived incongruence for socioemotional care preferences was related to lower quality of life and worse mood for the caregiver. Interestingly, perceived incongruence for PADLs predicted higher quality of life and better mood for the caregiver. Implications: Findings have implications for communication between care partners, especially regarding socioemotional care preferences. Socioemotional preferences, which might be overlooked in the creation of a care plan, may influence the person with dementia's well-being.