Mnemonic discrimination, a cognitive process that relies on hippocampal pattern separation, is one of the first memory domains to decline in aging and preclinical Alzheimer's disease. We tested whether functional connectivity (FC) within the entorhinal-hippocampal circuit, measured with high-resolution resting state fMRI, is associated with mnemonic discrimination and amyloid-β (Aβ) pathology in a sample of 64 cognitively normal human older adults (mean age, 71.3 ± 6.4 years; 67% female). FC was measured between entorhinal-hippocampal circuit nodes with known anatomical connectivity, as well as within cortical memory networks. Aβ pathology was measured with 18F-florbetapir-PET, and neurodegeneration was assessed with subregional volume from structural MRI. Participants performed both object and spatial versions of a mnemonic discrimination task outside of the scanner and were classified into low-performing and high-performing groups on each task using a median split. Low object mnemonic discrimination performance was specifically associated with increased FC between anterolateral entorhinal cortex (alEC) and dentate gyrus (DG)/CA3, supporting the importance of this connection to object memory. This hyperconnectivity between alEC and DG/CA3 was related to Aβ pathology and decreased entorhinal cortex volume. In contrast, spatial mnemonic discrimination was not associated with altered FC. Aβ was further associated with dysfunction within hippocampal subfields, particularly with decreased FC between CA1 and subiculum as well as reduced volume in these regions. Our findings suggest that Aβ may indirectly lead to memory impairment through entorhinal-hippocampal circuit dysfunction and neurodegeneration and provide a mechanism for increased vulnerability of object mnemonic discrimination.SIGNIFICANCE STATEMENT Mnemonic discrimination is a critical episodic memory process that is performed in the dentate gyrus (DG) and CA3 subfield of the hippocampus, relying on input from entorhinal cortex. Mnemonic discrimination is particularly vulnerable to decline in older adults; however, the mechanisms behind this vulnerability are still unknown. We demonstrate that object mnemonic discrimination impairment is related to hyperconnectivity between the anterolateral entorhinal cortex and DG/CA3. This hyperconnectivity was associated with amyloid-β pathology and neurodegeneration in entorhinal cortex, suggesting aberrantly increased network activity is a pathological process. Our findings provide a mechanistic explanation of the vulnerability of object compared to spatial mnemonic discrimination in older adults and has translational implications for choice of outcome measures in clinical trials for Alzheimer's disease.