Using virtual reality (VR), we examined the barriers to and facilitators of functioning outdoors in persons with dementia (PwD) and investigated the generalizability of findings in VR to the real world. An existing town center was modeled in VR. PwD took part in both real-world and VR walks. Based on the results, the model was redesigned and then tested again. Performance on the walks improved, and potentially beneficial adaptations to outdoor environments were identified, but limitations of VR as a representation of the real world were also identified. We conclude that VR models, together with a rigorous behavioral testing method, can be a useful tool for the evaluation of outdoor environments and for identifying improvements for PwD.