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Elevated iron deposition in the brain has been observed in older adult humans and persons with Alzheimer's disease (AD), and has been associated with lower cognitive performance. We investigated the impact of iron deposition, and its topographical distribution across hippocampal subfields and segments (anterior, posterior) measured along its longitudinal axis, on episodic memory in a sample of cognitively unimpaired older adults at elevated familial risk for AD (N = 172, 120 females, 52 males; mean age = 68.8 ± 5.4 years). MRI-based quantitative susceptibility maps were acquired to derive estimates of hippocampal iron deposition. The Mnemonic Similarity Task was used to measure pattern separation and pattern completion, two hippocampally mediated episodic memory processes. Greater hippocampal iron load was associated with lower pattern separation and higher pattern completion scores, both indicators of poorer episodic memory. Examination of iron levels within hippocampal subfields across its long axis revealed topographic specificity. Among the subfields and segments investigated here, iron deposition in the posterior hippocampal CA1 was the most robustly and negatively associated with the fidelity memory representations. This association remained after controlling for hippocampal volume and was observed in the context of normal performance on standard neuropsychological memory measures. These findings reveal that the impact of iron load on episodic memory performance is not uniform across the hippocampus. Both iron deposition levels as well as its spatial distribution, must be taken into account when examining the relationship between hippocampal iron and episodic memory in older adults at elevated risk for AD.