Mnemonic discrimination of highly similar memory traces is affected in healthy aging via changes in hippocampal pattern separation—i.e., the ability of the hippocampus to orthogonalize highly similar neural inputs. The decline of this process leads to a loss of episodic specificity. Because previous studies have almost exclusively tested mnemonic discrimination of visuospatial stimuli (e.g., objects or scenes), less is known about age-related effects on the episodic specificity of semantically similar traces. To address this gap, we designed a task to assess mnemonic discrimination of verbal stimuli as a function of semantic similarity based on word embeddings. Forty young (Mage = 21.7 years) and 40 old adults (Mage = 69.8 years) first incidentally encoded adjective-noun phrases, then performed a surprise recognition test involving exactly repeated and highly similar lure phrases. We found that increasing semantic similarity negatively affected mnemonic discrimination in both age groups, and that compared to young adults, older adults showed worse discrimination at medium levels of semantic similarity. These results indicate that episodic specificity of semantically similar memory traces is affected in aging via less efficient mnemonic operations and strengthen the notion that mnemonic discrimination is a modality-independent process supporting memory specificity across representational domains.