Working with people living with dementia in residential facilities for older adults can be challenging, and this is exacerbated when staff have a limited understanding of dementia. However, the relationship between knowledge of dementia and strain in caring for people with dementia among residential facility staff is unclear. This cross-sectional study investigated the relationship between dementia knowledge and strain in caring for people with dementia. A questionnaire containing the Dementia Knowledge Assessment and Strain in Dementia Care Scales was administered in 2017 and 2019 to 141 staff in three southern Australian residential facilities for older adults. Bivariate and hierarchical regression analysis examined inter-scale relationships and the power of dementia strain to explain knowledge variance. It was found that staff had substantial gaps in dementia knowledge (mean score 32/50) and low strain in dementia care (mean score 4/16). A positive relationship was found between higher dementia knowledge and greater strain in dementia care (rs = 0.319, p < .001), particularly with feeling that residents are not receiving appropriate care from colleagues (Factor 1 Frustrated Empathy; rs = 0.392, p < .001). Frustrated Empathy explained a significant amount of variance in dementia knowledge beyond demographic variables. The findings suggest that more comprehensive dementia knowledge is associated with higher strain in care of people with dementia, particularly in the context of perceived lapses in the quality of care provided by colleagues. Arguably, organisational-wide dementia education to address identified gaps should be supported by facilitating staff enaction of their knowledge to improve care.