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Older adults are more likely than younger adults to falsely recall past episodes that occurred differently or not at all. We examined whether older adults’ propensity for false associative memory is related to declines in postretrieval monitoring processes and their modulation with varying memory representations. Younger (N = 20) and older adults (N = 32) studied and relearned unrelated scene-word pairs, followed by a final cued recall that was used to distribute the pairs for an associative recognition test 24 hours later. This procedure allowed individualized formation of rearranged pairs that were made up of elements of pairs that were correctly recalled in the final cued recall (“high-quality” pairs), and of pairs that were not correctly recalled (“low-quality” pairs). Both age groups falsely recognized more low-quality than high-quality rearranged pairs, with a less pronounced reduction in false alarms to high-quality pairs in older adults. In younger adults, cingulo-opercular activity was enhanced for false alarms and for low-quality correct rejections, consistent with its role in postretrieval monitoring. Older adults did not show such modulated recruitment, suggesting deficits in their selective engagement of monitoring processes given variability in the fidelity of memory representations. There were no age differences in hippocampal activity, which was higher for high-quality than low-quality correct rejections in both age groups. These results demonstrate that the engagement of cingulo-opercular monitoring mechanisms varies with memory representation quality and contributes to age-related deficits in false associative memory.