To test competing models of age-related changes in brain functioning (capacity limitation, neural efficiency, compensatory reorganization, and dedifferentiation), young (n=40; mean age=25.1 years) and elderly (n=18; mean age=74.4 years) subjects performed a delayed item recognition task for visually presented letters with three set sizes (1, 3, or 6 letters) while being scanned with BOLD fMRI. Spatial patterns of brain activity corresponding to either the slope or y-intercept of fMRI signal with respect to set size during memory set encoding, retention delay, or probe stimulus presentation trial phases were compared between elder and young populations. Age effects on fMRI slope during encoding and on fMRI y-intercept during retention delay were consistent with neural inefficiency; age effects on fMRI slope during retention delay were consistent with dedifferentiation. None of the other fMRI signal components showed any detectable age effects. These results suggest that, even within the same task, the nature of brain activation changes with aging can vary based on cognitive process engaged.