A growing number of researchers have argued that both identity and self are narrative: a person’s identity develops and changes through a constant narrative elaboration and revision. Disorders like Alzheimer’s disease as well as many other brain disorders challenge the idea of a connection between human identity and stories. The reason for this is that dementia changes not only the story but also the storyteller: the kind of stories persons living with dementia tell often tend to deviate from cultural narrative norms and expectations. Storytelling is still a relevant activity for the person with dementia at all the different stages of the disease process for the simple reason that both the person with dementia and other family members have much of their identity invested in everyday stories, and they all continue to tell stories even when the person with dementia has severe problems with telling the stories. In dementia the pathological brain processes imply changes in the functional systems of the brain so that processes of the construction and maintenance of identities have less functional brain resources (episodic memory for instance). A consequence of the shifts in brain functionalities and resources is that narratives and identities become more dependent on other persons and socially and physically distributed cognitive processes. As the dementia progresses the patterns of engagement of the person with dementia in the storytelling activity will change. Some persons with dementia can tell autobiographical stories on their own, while others can do it with support, especially from their spouses. In this chapter we review how an interactional perspective so far has been used to understand the processes that produce narratives and identities of people with dementia across different types and stages of dementia. Also, drawing on our own and previous research, we suggest a framework for how narratives and identity construction can be understood in the case of dementia through the idea of collaborative compensatory adaption.