Age-related changes in the neural mechanisms of picture encoding were investigated using functional magnetic resonance imaging (fMRI). Seven younger and seven older adults were studied while they were encoding pairs of concrete-related, concrete-unrelated, and abstract pictures. Functional (T2*-weighted) and anatomical (T1-weighted) images of the brain were obtained using a 1.5 T MRI scanner. The results in the younger adults showed that the left dorsal prefrontal cortex (PFC) was activated during associative learning of the concrete-unrelated or abstract pictures. The results also suggest that both ventral and dorsal visual pathways are involved in the encoding of abstract pictures, and that the right superior parietal lobule likely mediates spatial information of the abstract pictures. The older adults showed significant activation in the left dorsal PFC under concrete-unrelated and abstract conditions. However, the older adults failed to activate either the left ventral and right dorsal PFC under the concrete-unrelated condition, or the parietal areas under abstract condition. A direct comparison between the two age groups demonstrates that the older adults had a reduced activation in the bilateral parieto-temporo-occipital areas under abstract condition, and in the right temporo-occipital area extending to the fusiform gyrus under the concrete-unrelated condition. Finally, age difference was found in correlation between memory performance and amplitude of signal change in the parahippocampal gyrus and fusiform gyrus under the concrete-unrelated and abstract conditions. These changes in neural response likely underlie the age-related memory decline in relation to pictorial information.