Event-related potentials (ERPs) were recorded from young (M = 25) and older (M = 71) adults during a recognition memory paradigm that assessed episodic priming. Participants studied two temporally distinct lists of sentences (each with two unassociated nouns). At test, in response to the nouns, participants made old-new, followed by remember (context)-know (familiarity) and source (i.e., list) judgments. Both young and older adults showed equivalent episodic priming effects. However, compared to the young adults, the older adults showed a greater source performance decrement than item memory performance decrement. Both age groups showed equivalent posterior-maximal old-new ERP effects. However, only the young produced a frontal-maximal, late onset old-new effect that differed as a function of subsequent list attribution. Because source memory is thought to be mediated by prefrontal cortex, we conclude that age-related memory differences may be due to a deficit in a prefrontal cortical system that underlies source memory and are not likely to be due to an age-related decline in episodic priming.