An important issue in contemporary memory research is whether memory for content (item memory) and memory for context (source memory) are mediated by different neuronal circuitries. We examined developmental aspects of both forms of memory. Two groups of children (6-8 yrs, 10-12 yrs) and young adults (20-29 yrs) performed an item memory (inclusion) task and a source memory (exclusion) task while event-related potentials (ERPs) were recorded. Performance in the inclusion task increased linearly with age, with children and adults using different response strategies: children adapted a conservative response criterion and gave their recognition judgments mainly on the basis of recollection as evident in a left parietal ERP old/new effect. Adults adopted a more liberal response criterion that was paralleled by a widely distributed old/new effect. This suggests that adults in contrast to children gave their recognition judgments on the basis of both recollection and familiarity. In the exclusion task, both groups of children performed less accurate than adults. This was mainly due to childrens’ elevated false alarm rates to nontargets. Together with the absence of any frontal ERP old/new effect in the two groups of children, these findings suggest a selective impairment in retrieving a bound representation of an item and its study context, presumably caused by the delayed maturation of the PFC.