Background: Activities of daily living (ADL) vary across cultures, and measure of ADL needs to be specific to the population under study. We developed an ADL measure for Thai elderly with dementia and investigated the reliability and validity of this instrument. Materials and Methods: Item construction was accomplished with a panel of neurologists and a rehabilitation medicine physician. One hundred eighty-one subjects were interviewed using the Thai ADL measure. Of this sample, one hundred fifty-nine had dementia according to the Diagnosic and Statistical Manual of Mental Disorders, fourth edition criteria. These data were analyzed for internal consistency; concurrent validity was determined by comparison with the Barthel Index, Functional Assessment Questionnaire (FAQ), Thai Mental State Exam (TMSE), and Clinical Dementia Rating (CDR) scale; and discriminant validity was determined by comparison with the Neuropsychiatric Inventory (NPI). Thirty subjects were tested to determine interrater and test-retest reliability. Results: Thai ADL measure was composed of six basic ADL and seven instrumental ADL. It had high correlation with TMSE scores (r = −.69), CDR scores (r = .81), Barthel Index scores (r = −.08), and FAQ scores (r = .88), and moderate correlation with NPI scores (r = .46). The instrument had high test-retest reliability (intraclass correlation coefficient [ICC] = .92, .89) and high interrater reliability (ICC = .96, .93). Conclusion: The Thai ADL scale is easy to use and it has high reliability. It had high concurrent validity with previously published ADL scales. The methodology used to develop the Thai ADL scale can provide a model for creating culturally competent ADL scales.