Studies have shown that a functional polymorphism of the serotonin transporter gene (5-HTTLPR) impacts performance on memory-related tasks and the hippocampal structures that subserve these tasks. The short (s) allele of 5-HTTLPR has been linked to greater susceptibility for impaired memory and smaller hippocampal volume compared to the long allele (l). However, previous studies have not examined the associations between 5-HTTLPR allele and activation in subregions of the hippocampus. In this study, we used functional magnetic resonance imaging (fMRI) to measure activation in hippocampal and temporal lobe subregions in 36 elderly non-clinical participants performing a face-name encoding and recognition task. Although there were no significant differences in task performance between s allele carriers and l homozygotes, right CA1 and right parahippocampal activation during recognition errors was significantly greater in individuals bearing the s allele. In an exploratory analysis, we determined that these effects were more pronounced in s allele carriers with the apolipoprotein ɛ4 allele. Our results suggest that older individuals with the s allele inefficiently allocate neural resources while making errors in recognizing face-name associations, which could negatively impact memory performance during more challenging tasks.