Episodic memory refers to memory for personally experienced events, and includes specific markers to demarcate events into a spatial and temporal context. Impaired episodic memory is a hallmark deficit associated with aging and also has been suggested to serve as one of the earliest indicators of impending Alzheimer's disease. Pattern separation is a hippocampal-dependent mnemonic process that may be critical to the accurate encoding, and subsequent retrieval, of episodic memories. Pattern separation is a process in which partially overlapping patterns of neural activation are separated into discrete representations. This process is fundamental to reducing interference that can occur when different memory representations have similar elements. Computational models suggest that the mechanism of pattern separation is facilitated by sparse mossy fiber connections from the dentate gyrus to the CA3 subfield of the hippocampus. Support for this hypothesis has been reported in findings from behavioral and electrophysiological studies in animals, studies of humans with hippocampal damage, and fMRI studies of healthy individuals. Studies examining region specific age-related changes in the hippocampus have reported that both the dentate gyrus and CA3 subregion are adversely affected by aging. However, only one study thus far has examined the effects of aging on pattern separation. The study reported that older adults were impaired relative to young adults on a visual object pattern separation task. The current study examined the ability of young adults and nondemented older adults to perform a task that required spatial pattern separation. Each trial consisted of a sample phase followed by a choice phase. During the sample phase, a gray circle appeared on a computer screen for five seconds. The participant was instructed to remember the location of the circle on the screen. During the choice phase, one red circle and one blue circle were displayed simultaneously on the screen and the participant was asked to indicate which of the two colored circles was in the same location as the gray circle from the sample phase. The target and foil circles on the choice phase trials were separated by one of four possible spatial separation lags: 0 cm, 0.5 cm, 1.0 cm, and 1.5 cm. It was hypothesized that smaller separation lags would result in increased interference between memory representations, thus requiring the operation of a pattern separation mechanism to orthogonalize spatial input and create distinct representations. The data indicate that performance increased as a function of increased spatial separation lag in both young and older adults. However, young adults outperformed older adults overall. These results suggest that age-related degeneration in the hippocampus may result in decreased efficiency of hippocampal-dependent mnemonic processes such as pattern separation. The present findings may have important implications for designing behavioral interventions for older adults that structure daily living tasks to reduce interference, thus improving memory function. In addition, impairments in pattern separation and other specific mnemonic processes may serve as sensitive markers of age-related cognitive dysfunction.