The ability of motor training to encode a motor memory is reduced in older adults. Here, we tested the hypothesis that training-dependent memory encoding, an issue of relevance in neurorehabilitation, is enhanced in elder individuals by action observation which alone can contribute to learning processes. A group of 11 healthy older adults participated in this study, which consisted of three randomized counterbalanced sessions on different days testing the effects of motor training (MT) alone, action observation (AO) alone, and a combination of both (MT + AO) on motor memory encoding. The combination of MT + AO formed a motor memory in the primary motor cortex and differentially modulated motor cortical excitability in muscles that were agonist and antagonist with respect to the training task, but MT or AO alone did not. These results suggest that action observation can enhance the effects of motor training on memory encoding protocols in the older adult, possibly through Hebbian modulation of intracortical excitatory mechanisms.