OBJECTIVES: Green Care Farms (GCFs) are gaining attention as innovative dementia care environment. Compared with regular nursing homes, first studies suggested a more active daily life, more social interaction and a higher quality of life of GCF residents. Regular facilities aiming to redesign and implement GCF elements might be hindered to do so by a lack of space for meadows or regulations prohibiting animals. Therefore, this study explored the underlying mechanisms by which GCFs may generate the positive effects. DESIGN: This study is an observational, explorative study using multiple methods. SETTING: One GCF and one traditional nursing home aiming to implement GCF elements. PARTICIPANTS: Residents, family members, staff, managers, and other involved individuals of the two nursing homes. MEASUREMENTS: Ethnographic observations (n = 52 days), semi-structured interviews (n = 67) and a focus group with experts from various disciplines were conducted. Data was analyzed thematically and triangulated. RESULTS: We identified six possible mechanisms of GCFs encouraging an active daily life. These are: 1) stimulating the senses, 2) promoting engagement in purposeful activities tailored to the individual, 3) creating a community, 4) promoting freedom and autonomy in a responsible way, 5) integrating the vision in all actions, and 6) continuously transforming to carry out the vision in practice. CONCLUSIONS: Our results provide first insights into environmental working mechanisms, which are relatively generic and have the potential to be transferred to other settings. Hence, this study provides other care organizations with guidance on implementing the care vision of GCFs in their local context. WHAT IS ALREADY KNOWN: WHAT THIS PAPER ADDS.