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Design for dementia has, to date, focused on the internal, generally institutional environment of care homes and dementia care facilities. Yet the majority of older people with dementia live at home, around one third of these on their own. Unless outdoor environments are designed to help older people with dementia continue to use their local neighbourhoods they will become effectively housebound. This paper presents the findings of a three‐year research project conducted by the WISE (Wellbeing in Sustainable Environments) research unit of the Oxford Institute for Sustainable Development at Oxford Brookes University. The researchers were funded by the EPSRC EQUAL initiative to examine how the outside environment could be made dementia friendly. This unprecedented research investigated the perceptions, experiences and use of the outdoor environment by older people with dementia and identified design factors that influence their ability to successfully use and negotiate their local neighbourhoods. The research found that dementia‐friendly outdoor environments are places that are familiar, legible, distinctive, accessible, comfortable and safe. The findings have enabled the researchers to provide some preliminary recommendations for designers, at all scales from urban design to the design of street furniture, on the criteria to consider in developing dementia‐friendly urban areas.