The apolipoprotein varepsilon4 allele (APOE*4) is a major genetic risk factor for Alzheimer's disease (AD) and has been associated with altered cortical activation as assessed by functional neuroimaging in cognitively normal younger and older carriers. We chose to evaluate medial temporal lobe (MTL) activation during encoding and recognition using a perspective-dependent (route or survey) visuospatial memory task by monitoring the blood-oxygen-level-dependent (BOLD) fMRI response in older, non-demented APOE*4 carriers (APOE*4+) and non-carriers (APOE*4-). During encoding, the APOE*4- group had greater average task-associated BOLD responses in ventral visual pathways, including the MTLs, as compared to the APOE*4+ group. Furthermore, MTL activation was greater during route encoding than survey encoding on average in APOE*4-, but not APOE*4+, subjects. During recognition, both groups performed similarly and no BOLD signal differences were found. Finally, within-group analysis revealed MTL activation during encoding was correlated with recognition performance in APOE*4-, but not APOE*4+ subjects. Reduced task-associated MTL activation that does not correlate with either visuospatial perspective or task performance suggests that MTL dysregulation occurs prior to clinical symptoms of dementia in APOE*4 carriers.