Introduction Generic instruments for assessing health-related quality of life may lack the sensitivity to detect changes in health specific to certain conditions, such as dementia. The Quality of Life in Alzheimer's Disease (QOL-AD) is a widely used and well-validated condition-specific instrument for assessing health-related quality of life for people living with dementia, but it does not enable the calculation of quality-adjusted life years, the basis of cost utility analysis. This study will generate a preference-based scoring algorithm for a health state classification system -the Alzheimer's Disease Five Dimensions (AD-5D) derived from the QOL-AD. Methods and analysis Discrete choice experiments with duration (DCE TTO) and best-worst scaling health state valuation tasks will be administered to a representative sample of 2000 members of the Australian general population via an online survey and to 250 dementia dyads (250 people with dementia and their carers) via face-to-face interview. A multinomial (conditional) logistic framework will be used to analyse responses and produce the utility algorithm for the AD-5D. Ethics and dissemination The algorithms developed will enable prospective and retrospective economic evaluation of any treatment or intervention targeting people with dementia where the QOL-AD has been administered and will be available online. Results will be disseminated through journals that publish health economics articles and through professional conferences. This study has ethical approval.