Neuroimaging studies of episodic memory in young adults demonstrate greater functional neural activity in ventrolateral pFC and hippocampus during retrieval of relational information as compared with item information. We tested the hypothesis that healthy older adults—individuals who exhibit behavioral declines in relational memory—would show reduced specificity of ventrolateral prefrontal and hippocampal regions during relational retrieval. At study, participants viewed two nouns and were instructed to covertly generate a sentence that related the words. At retrieval, fMRIs were acquired during item and relational memory tasks. In the relational task, participants indicated whether the two words were previously seen together. In the item task, participants indicated whether both items of a pair were previously seen. In young adults, left posterior ventrolateral pFC and bilateral hippocampal activity was modulated by the extent to which the retrieval task elicited relational processing. In older adults, activity in these regions was equivalent for item and relational memory conditions, suggesting a reduction in ventrolateral pFC and hippocampal specificity with normal aging.