Objectives Individuals with bipolar disorder (BD) have trait-like deficits in attention and working memory (WM). A fundamental dissociation for most verbal WM theories involves the separation of sensory-perceptual encoding, reliant upon attention, from the maintenance of this information in WM proper. The present paper examined if patients with BD demonstrate differential neural changes in encoding and maintenance WM processes that underlie cognitive impairment. Methods Event-related functional magnetic resonance imaging during a delayed match-to-sample WM paradigm was employed with 23 inter-episode medicated patients with BD and 23 demographically similar healthy comparison participants. We examined brain regions during encoding and maintenance task intervals to identify regions that demonstrated differential effects between groups. Medication effects and functional connectivity between prefrontal cortex and basal ganglia/thalamus were examined during the encoding interval due to the importance of these regions and the connection among them for encoding into WM. Results Patients with BD exhibited deficits in task accuracy and attenuated brain response during the encoding interval in areas of the prefrontal cortex, caudate, thalamus, and posterior visual regions. In contrast, patients with BD exhibited hyperactivation in posterior sensory regions during the maintenance interval. Among the BD group, those with greater medication load exhibited the greatest brain response within the prefrontal cortex. Conclusions Reduction in activation during the encoding interval suggests that attentional deficits underlie WM deficits in patients with BD. These deficits appear to be trait-like in so far as they were observed during periods of euthymia in patients with BD. Medication effects remain to be further explored as there was evidence of prefrontal changes dependent on medication load.