Aim Memory dysfunction is a major component of age‐related cognitive decline, and is a marker of cognitive impairment. Emerging evidence suggests that the prefrontal cortex is required for maintenance of memory functions. The purpose of the present study was to elucidate age‐related changes in prefrontal oxygenation during memory encoding and retrieval using near‐infrared spectroscopy. Methods We examined 21 young (mean age 24.3 years), 52 young‐old (mean age 69.7 years) and 50 old‐old (mean age 79.5 years) participants. The concentration of oxyhemoglobin, which is a reliable biomarker of changes in regional cerebral blood flow, in the right and left prefrontal cortex was measured during encoding and delayed retrieval of a list of 10 target words. The average number of correct answers in the retrieval task was used as a measure of task performance. Results During encoding, oxyhemoglobin was significantly and bilaterally lower in young‐old and old‐old participants compared with young participants. Meanwhile, during retrieval, only old‐old participants showed significantly decreased oxyhemoglobin compared with young and young‐old participants. The old‐old participants showed fewer correct answers in the retrieval period than the young and young‐old participants. Conclusions Old‐old participants showed reduced prefrontal oxygenation during both encoding and retrieval, and decreased memory performance compared with younger participants. It is necessary for the clinical application of near‐infrared spectroscopy to consider the effects of demographic variables on cerebral oxygenation. Geriatr Gerontol Int 2016; 16: 1296–1304.