OBJECTIVES: PARO interventions have been used to treat agitation and mood symptoms of dementia effectively. However, the effects of a PARO intervention on physiological and cognitive function are unclear. To examine the effects of a group-based PARO intervention for older adults with mild dementia. DESIGN: Using a group-based PARO intervention randomized controlled trial with 2-arm parallel groups. SETTING AND PARTICIPANTS: Older adults with mild dementia aged 65 years or older from 4 dementia day care centers were recruited. METHODS: Physiological parameters were assessed using the finger tapping test (FTT) and heart rate variability (HRV). The Mini-Mental State Examination (MMSE), Geriatric Depression Scale-Short Form (GDS-SF), University of California Los Angeles loneliness scale-version 3 (UCLA-3), and Warwick-Edinburgh Mental Well-being Scale (WEMWBS) were assessed before the intervention, end of the intervention, and 1-month after the intervention. RESULTS: Using a repeated-measures generalized linear model, significant time × group interactions were found in the MMSE [F(2, 115) = 19.54, P < .001], FTT [F(2, 115) = 4.87, P = .01], HRV high-frequency [F(2, 115) = 3.57, P = .03], and high-frequency/low-frequency ratio [F(2, 115) = 0.96, P = .01], UCLA-3 [F(2, 115) = 54.7, P < .001], GDS-SF [F(2, 115) = 3.36, P = .04], and WEMWBS [F(2, 115) = 5.93, P < .001]. Furthermore, psychological parameters improved significantly and continuously even 1 month after the PARO intervention was finished. Physiological parameters significantly improved at week 6, but the effects had diminished by week 10. CONCLUSIONS AND IMPLICATIONS: A PARO intervention may effectively improve the physiological and psychological responses of people with mild dementia.