We used event-related fMRI to measure brain activity while younger and older adults performed an item-recognition task in which the memory-set size varied between 1 and 8 letters. Each trial was composed of a 4-second encoding period in which subjects viewed random letter strings, a 12-second retention period and a 2-second retrieval period in which subjects decided whether a single probe letter was or was not part of the memory set. For both groups, reaction time increased and accuracy decreased with increasing memory set-size. There were minimal age-related differences in activation patterns with increasing memory set-size in prefrontal cortex (PFC). Regression analyses of individual subjects' performance and cortical activity indicated that speed and accuracy accounted for considerable variance in dorsal and ventral PFC activity during encoding and retrieval. These results suggest that younger and older adults utilize similar working memory (WM) strategies to accommodate increasing memory demand. They support a model of cognitive slowing in which processing rate is related to neural efficiency.