Associative memory involves binding two or more items into a coherent memory episode. Relative to memory for single items, associative memory declines greatly in aging. However, older individuals vary substantially in their ability to memorize associative information. Although functional studies link associative memory to the medial temporal lobe (MTL) and prefrontal cortex (PFC), little is known about how volumetric differences in MTL and PFC might contribute to individual differences in associative memory. We investigated regional gray-matter volumes related to individual differences in associative memory in a sample of healthy older adults (n=54; age=60years). To differentiate item from associative memory, participants intentionally learned face-scene picture pairs before performing a recognition task that included single faces, scenes, and face-scene pairs. Gray-matter volumes were analyzed using voxel-based morphometry region-of-interest (ROI) analyses. To examine volumetric differences specifically for associative memory, item memory was controlled for in the analyses. Behavioral results revealed large variability in associative memory that mainly originated from differences in false-alarm rates. Moreover, associative memory was independent of individuals' ability to remember single items. Older adults with better associative memory showed larger gray-matter volumes primarily in regions of the left and right lateral PFC. These findings provide evidence for the importance of PFC in intentional learning of associations, likely because of its involvement in organizational and strategic processes that distinguish older adults with good from those with poor associative memory.