This study aimed to examine the trends and factors associated with antipsychotic prescriptions for elderly outpatients with dementia in Taiwan from 2005 to 2013. We assessed the annual prescription patterns of antipsychotic medications among elderly patients attending outpatient visits for dementia between 2005 and 2013 using the National Health Insurance Research Database in Taiwan. We also carried out logistic regression analyses to test the trends and associated factors. We found that any antipsychotic prescriptions for elderly patients making visits for dementia increased slightly, from 25.5 to 26.5%, over the 9-year period. From 2005 to 2013, prescriptions for first-generation antipsychotics only decreased from 7.8 to 3.3%, whereas second-generation antipsychotic prescriptions only increased from 17.0 to 22.2%. Elderly dementia patients who were female, older, concomitantly using other psychotropic drugs (antidepressants, benzodiazepines, and Z-drugs), and treated by psychiatrists and at regional/local hospitals were prescribed significantly more antipsychotics, whereas patients with comorbid hypertension, hyperlipidemia, diabetes, and stroke used antipsychotics significantly less. Although physicians seemed to avoid prescribing antipsychotics for elderly outpatients with dementia and certain comorbid physical disorders, second-generation antipsychotic use increased during the study period. Physicians should balance the benefits and risks of antipsychotic use to ensure the safety of dementia patients.