The caregivers of elderly patients with dementia (N = 164) were followed for 2 years to determine if characteristics of the multigeneration family predicted nursing home placement (NHP) over and above the effects of patient demographics, severity of patient disease, and characteristics of caregivers. Clinical assessment occurred at baseline, and caregivers were assessed by questionnaire and interview at baseline and every 6 months. No patient demographic, severity, or caregiver characteristic significantly predicted NHP. Families scoring high on emotional closeness, high on negative family feelings, and low on family efficiency institutionalized their ill elders at a significantly higher rate than other families, especially at low levels of patient severity. The findings argue that a careful examination of the multigeneration family should increase the prediction of NHP and the relevance of services offered to these families.