A report by the Mental Welfare Commission found that three quarters of dementia patients on long-term wards had not left the hospital grounds in three months. In addition, many elderly men and women spend days isolated in rooms where they are unable to open a window for fresh air or even see outside.
Scottish Liberal Democrat justice spokesman Jim Hume said it painted a "depressingly Victorian picture of how dementia sufferers are being cared for in some NHS units".
He added: "There seems to be a lack of basic humanity in those units which have been described by the Mental Welfare Commission as institutional and stark.
"I was shocked to learn that 73% of patients surveyed had not been on an outing from the unit in the previous three months.
"Concerns over the excessive use of medication and the lack of person-centred care plans will be particularly worrying for sufferers and their loved ones.
"While I'm pleased that the Health Secretary has moved quickly to accept the recommendations in full I remain concerned that there is a wider cultural stigma attached to mental ill health.
"If we are to build a fairer society and give more people the chance they need to get on in life, we must change that culture."
The watchdog's findings came after inspectors visited 336 patients in all 52 continuing care dementia wards in Scotland.
Scottish Conservative health spokesman Jackson Carlaw MSP said: "The report is an urgent wakeup call given the inevitable increase in those likely to suffer dementia.
"The Health Secretary needs to act swiftly, lead from the front and ensure we all meet the challenge ahead of us."
Michael Matheson, minister for Public Health, said the Scottish Government was "committed to transforming dementia services".