Human aging is characterized by impaired spatial cognition and reductions in the distinctiveness of category-specific fMRI activation patterns. Yet, little is known about age-related decline in neural distinctiveness of information that humans use when navigating spatial environments. Here, we asked whether neural tuning functions of walking direction are broadened in older versus younger adults. To test this idea, we developed a novel method that allowed us to investigate changes in fMRI-measured pattern similarity while participants navigated in different directions in a virtual spatial navigation task. We expected that directional tuning functions would be broader in older adults, and thus activation patterns that reflect neighboring directions would be less distinct as compared to non-adjacent directions. Because loss of distinctiveness leads to more confusions when information is read out by downstream areas, we analyzed predictions of a decoder trained on directional fMRI patterns and asked (1) whether decoder confusions between two directions increase proportionally to their angular similarity, (2) and how this effect may differ between age groups. Evidence for tuning-function-like signals was found in the retrosplenial complex and early visual cortex, reflecting the primarily visual nature of directional information in our task. Significant age differences in tuning width, however, were only found in early visual cortex, suggesting that less precise visual information could lead to worse directional signals in older adults. At the same time, only directional information encoded in RSC, but not visual cortex, correlated with memory on task. These results shed new light on neural mechanisms underlying age-related spatial navigation impairments and introduce a novel approach to measure tuning specificity using fMRI.