Relative to young adults, older adults are particularly impaired in episodic memory tasks requiring associative binding of separate components into compound episodes, such as tasks requiring item-context and item-item binding. This associative-binding deficit has been attributed to senescent changes in frontal-hippocampal circuitry but has not been formally linked to impaired neuromodulation involving this circuitry. Previous neurocomputational work showed that impaired neuromodulation could result in less distinct neurocognitive representations. Here we extend this computational principle to simulate aging-related deficits in associative binding. As expected, networks with simulated deficiency in neuromodulation resulted in less distinct internal representations than did networks simulating the processing and performance of young adults, and were also more impaired under task conditions that required associative binding. The findings suggest that senescent changes in neuromodulatory mechanisms may play a basic role in aging-related impairment in associative binding by reducing the efficacy of distributed conjunctive coding.