Associative memory develops into adulthood and critically depends on the hippocampus. The hippocampus is a complex structure composed of subfields that are functionally-distinct, and anterior-posterior divisions along the length of the hippocampal horizontal axis that may also differ by cognitive correlates. Although each of these aspects has been considered independently, here we evaluate their relative contributions as correlates of age-related improvement in memory. Volumes of hippocampal subfields (subiculum, CA1-2, CA3-dentate gyrus) and anterior-posterior divisions (hippocampal head, body, tail) were manually segmented from high-resolution images in a sample of healthy participants (age 8–25 years). Adults had smaller CA3-dentate gyrus volume as compared to children, which accounted for 67% of the indirect effect of age predicting better associative memory via hippocampal volumes. Whereas hippocampal body volume demonstrated non-linear age differences, larger hippocampal body volume was weakly related to better associative memory only when accounting for the mutual correlation with subfields measured within that region. Thus, typical development of associative memory was largely explained by age-related differences in CA3-dentate gyrus.