Recent studies suggest that multisensory integration is enhanced in older adults but it is not known whether this enhancement is solely driven by perceptual processes or affected by cognitive processes. Using the “McGurk illusion,” in Experiment 1 we found that audio-visual integration of incongruent audio-visual words was higher in older adults than in younger adults, although the recognition of either audio- or visual-only presented words was the same across groups. In Experiment 2 we tested recall of sentences within which an incongruent audio-visual speech word was embedded. The overall semantic meaning of the sentence was compatible with either one of the unisensory components of the target word and/or with the illusory percept. Older participants recalled more illusory audio-visual words in sentences than younger adults, however, there was no differential effect of word compatibility on recall for the two groups. Our findings suggest that the relatively high susceptibility to the audio-visual speech illusion in older participants is due more to perceptual than cognitive processing.