Previous studies of episodic memory report a greater extent of blood-oxygenation-level-dependent (BOLD) response in non-demented older adults with the apolipoprotein E epsilon-4 (APOE epsilon4) allele than in those without the allele. We conducted a functional MRI study to investigate whether APOE genotype is related to brain response to verbal paired-associate encoding and consolidation, particularly in the right hemisphere, among non-demented older adults. Structurally segmented volumes and BOLD response were measured in 13 non-epsilon4 and 12 epsilon4 subjects. The epsilon4 group displayed greater activation than the non-epsilon4 group in multiple right hemisphere regions for previously encoded word pairs relative to fixation. Activation within manually outlined hippocampal regions of interest also displayed genotype-specific dissociations consistent with whole brain analyses. Furthermore, this differential BOLD response occurred in the presence of equivalent behavioral and neuropsychological performances as well as comparable hippocampal and overall structural segmentation volumes between groups. Results implicate a widely distributed and interconnected network of right hemisphere brain regions that may be involved in compensating for APOE epsilon4-related deficiencies associated with verbal episodic memory encoding and consolidation.