Memory impairments and heightened prefrontal cortical (PFC) activity are hallmarks of cognitive and neurobiological human aging. While structural integrity of PFC gray matter and interregional white matter tracts are thought to impact memory processing, the balance of neurotransmitters within the PFC itself is less well understood. We used fMRI to establish whole-brain networks involved in a memory encoding task and dynamic causal models (DCMs) for fMRI to determine the causal relationships between these areas. These data revealed enhanced connectivity from PFC to medial temporal cortex that negatively correlated with recall ability. To better understand the intrinsic activity within the PFC, DCM for EEG was employed after continuous theta burst transcranial magnetic stimulation (TMS) to the PFC to assess the effect on excitatory/inhibitory (E/I) synaptic ratios and behavior. These data revealed that the young cohort had a stable E/I ratio that was unaffected by the TMS intervention, while the aged cohort exhibited lower E/I ratios driven by a greater intrinsic inhibitory tone. TMS to the aged cohort resulted in decreased intrinsic inhibition and a decrement in memory performance. These results demonstrate increased top-down influence of PFC upon medial temporal lobe in healthy aging that is associated with decreased memory and may be due to unstable local inhibitory tone within the PFC.