The aim of this study was to investigate caregiver distress in reacting to the care recipient's behavioral and psychological symptoms of dementia (BPSD) and factors contributing to caregiver distress in the community setting in China. One hundred and fifty-two family caregivers of people with dementia in community settings were assessed using the Chinese version of the Neuropsychiatric Inventory-Questionnaire and the Social Support Rating Scale. The prevalence of BPSD and caregiver distress in reacting to BPSD was higher in China than those reported in high income countries. The most common individual BPSD were apathy/indifference, depression/dysphoria and night-time behaviors. Delusions, hallucinations and apathy/indifference were rated as the most distressing to caregivers. BPSD contributed most to caregiver distress. The high level of caregiver distress identified in this study suggests that dementia services and caregiver support should be established in the public healthcare system to target the needs of people with dementia and their caregivers.