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Pattern separation refers to the neural process by which overlapping inputs are transformed into distinct representations, enabling discrimination of similar experiences. This mechanism, central to episodic memory, critically depends on hippocampal integrity, which is vulnerable to age-related atrophy. The present study examined whether pattern separation is significantly reduced in older adults. We recruited healthy younger (n = 20) and older (n = 20) participants who completed a scene-based pattern separation task requiring classification of images as old, new, or lure. Images varied in visual completeness to simulate degraded sensory input. Behavioral analyses revealed that older adults showed markedly lower overall accuracy than younger adults. They also exhibited a substantially reduced lure discrimination index and lower corrected recognition scores. Furthermore, older adults responded significantly slower. Collectively, our findings demonstrate robust age-related reductions in memory discrimination and recognition that are consistently observed across levels of perceptual degradation, in line with the vulnerability of hippocampal-dependent memory processes in aging. This research builds upon previous studies by using a scene-based MST with parametric image occlusion, offering a nuanced behavioral framework for assessing cognitive decline and memory deficits in older persons.