This study explores whether the balance of positive to negative affect can discriminate states of well-being in nursing home residents with dementia and whether affect balance is associated with activity engagement. Measures of agitation and affect were taken from video recordings of observational sessions, while measures of engagement and self-reported mood were taken in real time. Participants with high well-being had a mean ratio of positive–negative affect of 2.21 (±0.50), a ratio significantly different than that of participants with moderate to low well-being. Affect balance was related to greater activity engagement.