The dedifferentiation theory of aging proposes that a reduction in the specificity of neural representations causes declines in complex cognition as people get older, and may reflect a reduction in dopaminergic signaling. The present pharmacological fMRI study investigated episodic memory-related dedifferentiation in young and older adults, and its relation to dopaminergic function, using a randomized placebo-controlled double-blind crossover design with the agonist Bromocriptine (1.25 mg) and the antagonist Sulpiride (400 mg). We used multi-voxel pattern analysis to measure memory specificity: the degree to which distributed patterns of activity distinguishing two different task contexts during an encoding phase are reinstated during memory retrieval. As predicted, memory specificity was reduced in older adults in prefrontal cortex and in hippocampus, consistent with an impact of neural dedifferentiation on episodic memory representations. There was also a linear age-dependent dopaminergic modulation of memory specificity in hippocampus reflecting a relative boost to memory specificity on Bromocriptine in older adults whose memory was poorer at baseline, and a relative boost on Sulpiride in older better performers, compared to the young. This differed from generalized effects of both agents on task specificity in the encoding phase. The results demonstrate a link between aging, dopaminergic function and dedifferentiation in the hippocampus.