BACKGROUND Caregiver efficacy for managing the behavioral and psychological symptoms of dementia (BPSD) is an important determinant of family caregiver stress and burden. This study aims to develop a measure of caregiver efficacy for responding to BPSD and to evaluate its psychometric properties. METHODS The Caregiver Efficacy Scale adds an item for caregiver confidence in managing BPSD to each domain of the Neuropsychiatric Inventory (NPI). The validity, internal consistency, and factor structure of the scale were evaluated in 245 family caregivers. RESULTS The results provide adequate support for the validity and reliability of the Caregiver Efficacy Scale. The internal consistency was found to be adequate (Cronbach's α = 0.79) and the scale demonstrated good concurrent, construct, and criterion validity. As expected, performance on the Caregiver Efficacy Scale was associated with all dimensions of the NPI, including BPSD frequency (r = 0.869, p < 0.01) and severity (r = 0.883, p < 0.01), and negative outcomes, including negative affect (r = 0.411, p < 0.01), depression (r = 0.362, p < 0.01), anxiety (r = 0.376, p < 0.01), and distress (r = 0.865, p < 0.01). CONCLUSIONS The Caregiver Efficacy Scale might have clinical implications in facilitating the development of improved caregiver interventions for dealing with BPSD, allowing interventions to be tailored according to individual caregiver needs, and also in evaluating the effectiveness of interventions aimed at improving caregiver self-efficacy for managing BPSD.