Dementia affects approximately 55 million people worldwide, yet the psychological experience of diagnosis and the determinants of post-diagnostic wellbeing remain underexplored relative to biomedical research priorities. The existing literature has been predominantly deficit-oriented, focusing on cognitive decline, neuropsychiatric symptoms, and carer burden, with limited attention to preserved psychological capacities and what supports flourishing following diagnosis. This narrative review applies a positive psychology framework to synthesise evidence on meaning, purpose, hope, and post-diagnostic adjustment in early-stage dementia. A central empirical observation motivating the review is the wellbeing paradox: the consistent finding that subjective wellbeing in early-to-moderate dementia is frequently higher than carers and clinicians predict, and is more strongly associated with psychosocial variables than with objective cognitive status. Evidence from the IDEAL cohort and related longitudinal research demonstrates that emotional responsiveness, need satisfaction, and capacity for meaning-making are preserved in early-stage dementia and constitute clinically relevant assets. Four positive psychology constructs are identified as evidence-based targets for intervention: hope, self-compassion, social identity, and meaningful engagement. Clinical implications include the integration of strengths-based assessment, meaning-centred group interventions, structured peer support, and validated positive outcome measures into post-diagnostic care pathways. Health equity considerations and research priorities are addressed, including the underrepresentation of minority ethnic communities and people with young-onset dementia in existing research. The review argues that meaningful progress requires deliberate reorientation of clinical, commissioning, and research priorities toward a positive psychology framework for dementia care.