Objective To determine the national prevalence of psychotropic use and association with neuropsychiatric symptoms among patients with dementia. Methods Participants diagnosed with dementia (n = 414) in the Aging, Demographics, and Memory Study, a nationally representative survey of US adults >70 years old. Diagnosis was based on in‐person clinical assessment and informant interview. Information collected included demographics, place of residence, 10‐item Neuropsychiatric Inventory (NPI), and prescribed medications (antipsychotic, sedative‐hypnotic, antidepressant, mood stabilizer). Results Of 414 participants with dementia, 41.4% were prescribed a psychotropic medication, including 84.0% of nursing home residents and 28.6% of community‐dwellers. Of participants, 23.5% were prescribed an antidepressant. Compared with the total NPI score of those on no medication (4.5), those on antipsychotics and those on sedative‐hypnotics had much higher scores (respectively: 12.6, p < 0.001; 11.8, p = 0.03), although those antidepressants did not (6.9, p = 0.15). A larger proportion of patients on antipsychotics exhibited psychosis and agitation compared with those on no medication, while those on antidepressants exhibited more depressive symptoms. In multivariable logistic regression that included dementia severity and nursing home residence, nursing home residence was the characteristic most strongly associated with psychotropic use (odds ratio ranging from 8.96 [p < 0.001] for antipsychotics to 15.59 [p < 0.001] for sedative‐hypnotics). More intense psychotic symptoms and agitation were associated with antipsychotic use; more intense anxiety and agitation were associated with sedative‐hypnotic use. More intense depression and apathy were not associated with antidepressant use. Conclusions In this nationally representative sample, 41.4% of patients were taking psychotropic medication. While associated with neuropsychiatric symptoms, nursing home residence was most strongly tied to use. Copyright © 2016 John Wiley & Sons, Ltd.