We employed fMRI to index neural activity in prefrontal cortex during tests of recognition and source memory. At study, subjects were presented with words displayed either to the left or right of fixation, and, depending on the side, performed one of two orienting tasks. The test phase consisted of a sequence of three 10-word blocks, displayed in central vision. For one block, subjects performed recognition judgements on a mixture of two old and eight new words (low density recognition). For another block, recognition judgements were performed on a mixture of eight old and two new words (high density recognition). In the remaining block, also consisting of eight old and two new items, the requirement was to judge whether each word had been presented at study on the left or the right. Relative to the low density condition, high density recognition was associated with increased activity in right and, to a lesser extent, left, anterior prefrontal cortex (BA 10), replicating the findings of two previous PET studies. Right anterior prefrontal activity did not show any further increase during the source task. Instead, greater activity was found, relative to high density recognition, in left BA 10, left inferior frontal gyrus (BA 45/47), and bilateral opercular cortices (BA 45/47). The findings are inconsistent with the proposal that activation of right anterior prefrontal cortex during memory retrieval reflects “postretrieval” processing demands, such demands being considerably greater for judgments of source than recognition. The findings provide further evidence that the left prefrontal cortex plays a role in episodic memory retrieval when the task explicitly requires recovery of contextual as well as item information.