Functional magnetic resonance imaging (fMRI) was used to gain more insight in the mechanism underlying a decline in recognition memory function with age. Twelve young (23-27 years) and 12 older (63-67 years) healthy men performed two types of word encoding tasks, in which words were either incidentally or intentionally encoded for storage in memory. After a 30min delay, participants performed a recognition task. Older participants were less accurate and slower than young on the recognition task. In the both groups, successful retrieval was accompanied by activation in the left inferior frontal gyrus, left precentral gyrus and right cerebellum. Older participants showed additional activity in the bilateral medial prefrontal gyrus and right parahippocampal gyrus. Correlational analyses showed that only the additional parahippocampal activation correlated positively with task performance in the older but not young participants, suggesting that activation in this area served the purpose of functional compensation. The additional activation in the medial prefrontal cortex, on the other hand, was explained in terms of increased conflict, that is, reduced distinction between target and distracter words leading to increased simultaneous activity of both response tendencies. In a comparison between incidentally and intentionally remembered words the young group showed additional activation in the right middle occipital gyrus. This last result was explained in terms of strategic differences between the young and older group.