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Abstract Age-related reductions in neural selectivity have been linked to cognitive decline. We examined whether age differences in the strength of retrieval-related cortical reinstatement could be explained by analogous differences in neural selectivity at encoding, and whether reinstatement was associated with memory performance in an age-dependent or an age-independent manner. Young and older adults underwent fMRI as they encoded words paired with images of faces or scenes. During a subsequent scanned memory test participants judged whether test words were studied or unstudied and, for words judged studied, also made a source memory judgment about the associated image category. Using multi-voxel pattern similarity analyses, we identified robust evidence for reduced scene reinstatement in older relative to younger adults. This decline was however largely explained by age differences in neural differentiation at encoding; moreover, a similar relationship between neural selectivity at encoding and retrieval was evident in young participants. The results suggest that, regardless of age, the selectivity with which events are neurally processed at the time of encoding can determine the strength of retrieval-related cortical reinstatement.