Using PET, we have determined the neural substrates of age-related verbal episodic memory decline. Twelve young and twelve older healthy volunteers (mean age; 22 and 59 years, respectively) were scanned while performing encoding and retrieval tasks. Retrieval performance was lower in old than in young subjects. The PET data were analyzed using a combined subtraction/correlation approach. Classic subtraction disclosed prefrontal rCBF increases common to both groups, distributed bilaterally during encoding and exclusively right-sided during retrieval, without between-group differences. The correlation analysis between PET activity during encoding and subsequent retrieval performance revealed significant correlations for the left hippocampal region in both groups, but for the right inferior frontal gyrus in the older subjects only. Thus, lower performance in older subjects during an episodic retrieval task may reflect a combination of (i) subtle encoding dysfunction, evidenced by more widespread activity-performance correlations and (ii) less efficient retrieval, as evidenced by unaltered activation pattern (as revealed by the classic subtraction method) despite reduced performance. These exploratory findings suggest the aged brain may be unable to compensate for reduced efficiency of right prefrontal cortex by additional left frontal activation.