Auditory neuroscience research has uncovered distinctive patterns of auditory processing deficits across dementia variants, underscoring the urgent need for targeted soundscape interventions in indoor spaces and specifically for dementia care design. This paper develops a systematic framework linking dementia-specific auditory deficits to soundscape design principles. By examining both bottom-up and top-down auditory processing mechanisms, we elucidate how different forms of dementia affect auditory scene analysis. We present a functional block diagram that maps specific auditory deficits to distinct dementia types, including Alzheimer’s disease, frontotemporal dementia, and posterior cortical atrophy. This mapping guides the development of soundscape interventions that address both energetic and semantic masking while promoting temporal and spatial orientation. Our study reveals how strategic indoor soundscape augmentation can compensate for specific auditory processing deficits. Based on our findings, we present evidence-based guidelines for soundscape augmentation in indoor environments, emphasizing personalized approaches and environmental context. This work advances both the theoretical understanding of auditory processing in dementia and practical applications for creating supportive acoustic environments, ultimately enhancing the quality of life for people with dementia.