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It has consistently been reported that “negative” subsequent memory effects—lower study activity for later remembered than later forgotten items—are attenuated in older individuals. The present functional magnetic resonance imaging study investigated whether these findings extend to subsequent memory effects associated with successful encoding of item–context information. Older (n = 25) and young (n = 17) subjects were scanned while making 1 of 2 encoding judgments on a series of pictures. Memory was assessed for the study item and, for items judged old, the item's encoding task. Both memory judgments were made using confidence ratings, permitting item and source memory strength to be unconfounded and source confidence to be equated across age groups. Replicating prior findings, negative item effects in regions of the default mode network in young subjects were reversed in older subjects. Negative source effects, however, were invariant with respect to age and, in both age groups, the magnitude of the effects correlated with source memory performance. It is concluded that negative item effects do not reflect processes necessary for the successful encoding of item–context associations in older subjects. Negative source effects, in contrast, appear to reflect the engagement of processes that are equally important for successful episodic encoding in older and younger individuals.