Young and nondemented older adults were tested on a continuous recognition memory task requiring visual pattern separation. During the task, some objects were repeated across trials and some objects, referred to as lures, were presented that were similar to previously presented objects. The lures resulted in increased interference and an increased need for pattern separation. For each object, the participant was asked to indicate whether (1) this was the first time the object was seen (new), (2) the object was seen previously (old), or (3) the object was similar to a previous object (similar). Older adults were able to correctly identify objects as old or new as well as young adults; however, older adults were impaired when identifying lures as similar. Therefore, pattern separation may be less efficient in older adults resulting in poorer recognition memory performance when interference is increased.