Purpose The study examined age-related differences in the use of semantic context and in the effect of semantic competition in spoken sentence processing. We used offline (response latency) and online (eye gaze) measures, using the "visual world" eye-tracking paradigm. Method Thirty younger and 30 older adults heard sentences related to one of four images presented on a computer monitor. They were asked to touch the image corresponding to the final word of the sentence (target word). Three conditions were used: a nonpredictive sentence, a predictive sentence suggesting one of the four images on the screen (semantic context), and a predictive sentence suggesting two possible images (semantic competition). Results Online eye gaze data showed no age-related differences with nonpredictive sentences, but revealed slowed processing for older adults when context was presented. With the addition of semantic competition to context, older adults were slower to look at the target word after it had been heard. In contrast, offline latency analysis did not show age-related differences in the effects of context and competition. As expected, older adults were generally slower to touch the image than younger adults. Conclusions Traditional offline measures were not able to reveal the complex effect of aging on spoken semantic context processing. Online eye gaze measures suggest that older adults were slower than younger adults to predict an indicated object based on semantic context. Semantic competition affected online processing for older adults more than for younger adults, with no accompanying age-related differences in latency. This supports an early age-related inhibition deficit, interfering with processing, and not necessarily with response execution.