This study investigated associations between time processing ability (TPA), daily time management (DTM), and dementia severity. Persons with dementia (PwDs) (n = 53) and their significant others (n = 49) participated in this cross-sectional study. Bivariate analyses were used to investigate associations between TPA and DTM and the dementia severity. Linear regression models were used to further predict the contribution of the subtests in the Mini Mental State Examination (MMSE) for TPA results. The results showed significant correlations between TPA and dementia severity, where visuospatial functions were the most highly correlated. TPA also showed a significant correlation to proxy-rated DTM. In addition, proxy-rated DTM was significantly correlated with dementia severity and PwDs’ own self-ratings of their DTM. Knowledge of the association between TPA, dementia severity, and visuospatial functions can enable early detection of TPA impairments. For a comprehensive assessment of TPA and DTM, objective measures should be used in combination with self-ratings and proxy-ratings. The findings can be used in clinical research and healthcare settings to develop methods to compensate for impaired TPA and support DTM in PwDs.