While some elderly show deteriorations in cognitive performance, others achieve performance levels comparable to young adults. To examine whether age-related changes in brain activity varied with working memory performance efficiency, we recorded electroencephalography (EEG) from young and older healthy adults during performance on an n-back task with two loads (0- and 1-back) and two versions (identity and integrated). Young adults showed a typical P3 amplitude pattern with a parietal-maximum. Compared to young adults, the P3 amplitude of older adults was characterized by frontal hyperactivity coupled with posterior hypoactivity. Moreover, P3 amplitude in young and older adults varied with working memory performance efficiency. Among young adults, more efficient performance correlated with a larger P3 amplitude at parietal sites. In contrast, a higher P3 amplitude at midline electrode sites in older adults correlated with less efficient performance. Particularly, the enhanced frontal midline EEG activity in older adults during working memory performance seems to reflect inefficient use of neural resources due to frontal lobe dysfunction.