Consolidation of declarative memories has been associated with slow wave sleep in young adults. Previous work suggests that, in spite of changes in sleep, sleep-dependent consolidation of declarative memories may be preserved with aging, although reduced relative to young adults. Previous work on young adults shows that, with consolidation, retrieval of declarative memories gradually becomes independent of the hippocampus. To investigate whether memories are similarly reorganized over sleep at the neural level, we compared functional brain activation associated with word pair recall following a nap and equivalent wake in young and older adults. SWS during the nap predicted better subsequent memory recall and was negatively associated with retrieval-related hippocampal activation in young adults. In contrast, in older adults there was no relationship between sleep and memory performance or with retrieval-related hippocampal activation. Furthermore, compared with young adults, postnap memory retrieval in older adults required strong functional connectivity of the hippocampus with the PFC, whereas there were no differences between young and older adults in the functional connectivity of the hippocampus following wakefulness. These results suggest that, although neural reorganization takes place over sleep in older adults, the shift is unique from that seen in young adults, perhaps reflecting memories at an earlier stage of stabilization.