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Declarative memory declines with age, but there is profound variation in the severity of this decline. Healthy elderly adults with high or low memory scores and young adults viewed words under semantic or non-semantic encoding conditions while undergoing fMRI. Young adults had superior memory for the words, and elderly adults with high memory scores had better memory for the words than those with low memory scores. The elderly with high scores had left lateral and medial prefrontal activations for semantic encoding equal to the young, and greater right prefrontal activation than the young. The elderly with low scores had reduced activations in all three regions relative to the elderly with high memory scores. Thus, successful aging was characterized by preserved left prefrontal and enhanced right prefrontal activation that may have provided compensatory encoding resources.