This research examines the impact of age-related deficits in recognition and source memory on repetition-induced increases in belief in fictitious statements (the “truth effect”). Young and elderly subjects made recognition-memory judgments and rated the credibility of new and previously presented statements. Experiment 1 assessed the level of memory impairment in the elderly, as compared to the young, and its influence on the truth effect. The elderly, who had a greater tendency to make false-alarm errors in recognition and had poorer source memory for the claims, were more susceptible to the truth-inflating effect of repetition than were the young. Deeper (semantic vs. perceptual) processing was ineffective in reducing age-related deficits in memory or sensitivity to repetition-induced beliefs. Experiment 2 demonstrated that an imagery encoding task did provide more environmental support (a greater improvement in recognition and source memory for the elderly than the young) than did a perceptual encoding task. When both young and elderly subjects engaged in an imagery task during encoding, their memory performance was equivalent and age-related differences in the truth effect were abolished. Thus, it appears that the elderly are more susceptible to the truth-inflating effect of repetition, and this effect seems to be mediated via their poor memory. However, if memory is enhanced using environmental support, the elderly are no longer especially vulnerable to the truth effect.