Older people with declining cognitive function typically display deficits in declarative memory processes, often most evident on tests of associative learning (AL). The hippocampal formation (HF) is thought to be critically involved in the encoding and retrieval of such associations, consistent with neuroimaging findings that the HF is damaged in early stages of neurodegenerative disease and in older people with AL impairments. In the clinic, older people with cognitive decline commonly report difficulties associating names with faces. However, we have observed that such people are particularly impaired on tests requiring the association of novel stimuli. In Experiment 1, a series of AL tasks were administered to older people with cognitive decline to determine whether they were impaired at simply making associations, or at making associations between novel stimuli. In Experiment 2, we measured HF function in these subjects by administering an AL task designed to differentiate between HF-damaged and HF-intact individuals. Our experimental protocols were guided by a computational model of HF function in AL described by Gluck and Myers (1997). Older people with cognitive decline displayed impaired performance on tasks designed to be highly dependent upon intact HF function, including a task in which novel patterns and spatial locations were to be associated. These results suggest that the AL impairments observed in older people with cognitive decline may be due to HF dysfunction.