To examine racial differences in admissions to high-quality nursing homes (NHs) among residents with Alzheimer disease and related dementias (ADRD), and whether such racial differences can be influenced by dementia-related state Medicaid add-on policies. Retrospective cross-sectional study. The study included 786,096 Medicare beneficiaries with ADRD newly admitted from the community to NHs between January 1, 2011 and December 31, 2017. 2010-2017 Minimum Data Set 3.0, Medicare Beneficiary Summary File, Medicare Provider Analysis and Review, and Nursing Home Compare data were linked. For each individual, we constructed a "choice" set of NHs based on the distance between the NH and an individual residential zip code. McFadden's choice models were estimated to examine the relationship between admission into a high-quality (4- or 5-star) NH and individual characteristics, specifically race, and state Medicaid dementia-related add-on policies. Among the identified residents, 89% were White, and 11% were Black. Overall, 50% of White and 35% of Black individuals were admitted to high-quality NHs. Black individuals were more likely to be Medicare-Medicaid dually eligible. Results from McFadden's model suggested that Black individuals were less likely to be admitted to a high-quality NH than White individuals (OR = 0.615, P < .01), and such differences were partially explained by some individual characteristics. Furthermore, we found that the racial difference was reduced in states with dementia-related add-on policies, compared with states without these policies (OR = 1.16, P < .01). Black individuals with ADRD were less likely to be admitted to high-quality NHs than White individuals. Such difference was partially related to individuals' health conditions, social-economic status, and state Medicaid add-on policies. Policies to reduce barriers to high-quality NHs among Black individuals are necessary to mitigate health inequity in this vulnerable population.