Divided attention (DA) disrupts episodic encoding, but has little effect on episodic retrieval. Furthermore, normal aging is associated with episodic memory impairments, and when young adults are made to encode information under DA conditions, their memory performance is reduced and resembles that of old adults working under full attention (FA) conditions. Together, these results suggest a common neurocognitive mechanism by which aging and DA during encoding disrupt memory performance. In the current study, we used PET to investigate younger and older adults' brain activity during encoding and retrieval under FA and DA conditions. In FA conditions, the old adults showed reduced activity in prefrontal regions that younger adults activated preferentially during encoding or retrieval, as well as increased activity in prefrontal regions young adults did not activate. These results indicate that prefrontal functional specificity of episodic memory is reduced by aging. During encoding, DA reduced memory performance, and reduced brain activity in left-prefrontal and medial-temporal lobe regions for both age groups, indicating that DA during encoding interferes with encoding processes that lead to better memory performance. During retrieval, memory performance and retrieval-related brain activity were relatively immune to DA for both age groups, suggesting that DA during retrieval does not interfere with the brain systems necessary for successful retrieval. Finally, left inferior prefrontal activity was reduced similarly by aging and by DA during encoding, suggesting that the behavioral correspondence between these effects is the result of a reduced ability to engage in elaborate encoding operations.