Younger and older participants (n=8 in each age group) performed a letter-matching task, where they had to respond to identical letters (P=0.15). Task-relevant (target and non-target) letters were presented on two corners of an imagery square, while on the other two corners irrelevant letters were presented. In some trials (P=0.05), pictures of visual objects (novels, unrelated to the matching task) were presented. Reaction times were slower and error rates higher for older adults. The amplitude of the N1 event-related potential component was smaller over anterior locations for the older adults. All target stimuli elicited a late positivity over anterior locations for both age groups, but the late positivity (P3b) was absent over posterior scalp for the older adults. For the younger adults, novel stimuli elicited a large negative component (N2(novel)) that was maximal over the central location. No such activity was observed for older adults. Based on the results, processing of novel stimuli is considered to be compromised in the elderly.