Background: Informal caregiving for people with dementia can substantially affect carers’ quality of life. The COCOON project aimed to develop a preference-weighted quality of life measure for carers that can generate quality-adjusted life years (QALYs) for use in cost-utility analysis. Methods: Development involved three stages: (1) qualitative interviews with 10 carers to assess face validity of candidate items; (2) an online survey of 202 carers to evaluate psychometric performance; and (3) input from an Advisory Group throughout. Preference weights were estimated using a discrete choice experiment (DCE) with duration, administered to a representative sample of the Australian general population. A conditional logit model was used to derive an anchored value set. Results: From an initial pool of 60 items, 44 were shortlisted for qualitative testing. Interviews led to refinement and removal of items, reducing the set to 35. Following psychometric analysis and Advisory Group consultation, the final measure included seven domains: emotional health, physical health, loss and grief, loss of freedom, loneliness, support, and financial burden. Each domain is assessed using a 5-point frequency scale from ‘never’ to ‘always’. Multiple models were tested to generate preference weights, with the final model reflecting the monotonic structure of the descriptive system. Conclusion: The COCOON measure provides a robust way to capture carers’ quality of life and enables inclusion of carer outcomes in dementia cost-utility analyses, supporting more equitable and efficient resource allocation.