We examined the dynamic process of encoding novel repeating faces using functional MRI (fMRI) in non-demented elderly volunteers with and without diagnosed memory problems. We hypothesized that adaptation (repetition dependent reduction in activity) would occur in the mesial temporal lobe (MTL), and that this would be associated with cognitive status. Twenty-three right-handed volunteers were studied with an experimental encoding paradigm during fMRI scanning. Twelve participants had the diagnosis of mild cognitive impairment-amnestic type (MCI). The remaining 11 were cognitively healthy. All were diagnosed with a comprehensive neuropsychological battery and neurological evaluation prior to the study; they also received a brief cognitive battery the day of the scan. During the event-related fMRI task, participants viewed unfamiliar faces that repeated on average every 25s with seven repetitions. The reduction in activation response as a function of repetition of unfamiliar faces was modeled in SPM99. Statistical parametric maps of adaptation slopes reflecting the decrease in activation with stimulus repetition were calculated for each participant, followed by a random-effects group analysis in which slope images were tested for significant group differences. Significant differences in adaptation slopes, with more negative slopes in the controls, were found in the medial temporal search region in the hippocampus and parahippocampal gyrus bilaterally, right more than left. Gray matter density analyses suggest the adaptation difference is not due to atrophy. Results suggest that the medial temporal response over repeated presentation is related to clinical status. Probes of incremental encoding processes over trials may be useful markers of medial temporal lobe integrity.