The current study examined the ability of cognitively normal young adults (n = 30) and older adults (n = 30) to perform a delayed match-to-sample task involving varying degrees of spatial interference to assess spatial pattern separation. Each trial consisted of a sample phase followed by a choice phase. During the sample phase, a circle appeared briefly on a computer screen. The participant was instructed to remember the location of the circle on the screen. During the choice phase, two circles were displayed simultaneously and the participant was asked to indicate which circle was in the same location as the sample phase circle. The two circles on choice phase trials were separated by one of four possible spatial separations: 0 cm, 0.5 cm, 1.0 cm, and 1.5 cm. Smaller separations are likely to create increased overlap among memory representations, which may result in heightened interference and a greater need for pattern separation. Consistent with this hypothesis, performance increased as a function of increased spatial separation in both young and older adults. However, young adults outperformed older adults, suggesting that spatial pattern separation may be less efficient in older adults due to potential age-related changes in the dentate gyrus and CA3 hippocampal subregions. Older adults also were divided into older impaired and older unimpaired groups based on their performance on a standardized test of verbal memory. The older impaired group was significantly impaired relative to both the older unimpaired and young groups, suggesting that pattern separation deficits may be variable in older adults. The present findings may have important implications for designing behavioral interventions for older adults that structure daily living tasks to reduce interference, thus improving memory function.