Age differences in prospective memory (PM)—memory for delayed intentions—have shown paradoxical patterns between laboratory and naturalistic settings. Virtual reality (VR) has been used to try and enhance the ecological validity of PM assessments, but methodological differences and limited validation have undermined interpretation of previous findings. We compared age differences between VR- and naturalistic-based measures of PM performance for younger (18-30 years) and older (56-83 years) adults (N = 111) to explore the role of task context and familiarity. Participants completed PM tasks embedded in the Job Simulator VR videogame and a Breakfast task that involved setting a table and simulating breakfast food preparation. We also included two real-world measures in which participants tried to remember to exchange personal belongings with the experimenter (Belongings task) and return phone calls at specific times outside the lab (Call-back task). We found comparable age deficits in Job Simulator and the Breakfast task. However, the age-PM paradox persisted in the Belongings and Call-back tasks. Hierarchical regression modeling was conducted to determine the roles of working memory, vigilance, and personality traits in each. Regression analyses revealed that significant variance in lab-based PM performance was accounted for by individual differences in working memory and agreeableness in older adults, while variance in naturalistic PM performance was accounted for by vigilance and neuroticism in young adults. This study suggests that immersive VR gameplay helped to provide ecologically valid PM assessment and advance a theoretical account of the age-PM paradox with a systematic, task-based analysis of age and individual differences in PM. Different mediators predicted young and older adults’ PM differently across real-world and in-lab contexts (despite measuring similar, naturalistic PM in the same individuals in both VR and in real life). There are methodological, cognitive, & personality moderators, but the “paradox” appears to be a real developmental phenomenon.