Age impacts multiple neural measures and these changes do not always directly translate into alterations in clinical and cognitive measures. This partial protection from the deleterious effects of age in some individuals is referred to as cognitive reserve (CR) and although linked to variations in intelligence and life experiences, its mechanism is still unclear. Within the framework of a theoretical model we tested two potential mechanistic roles of CR to maintain task performance, neural reserve and neural compensation, in young and older adults using functional and structural MRI. Neural reserve refers to increased efficiency and/or capacity of existing functional neural resources. Neural compensation refers to the increased ability to recruit new, additional functional resources. Using structural and functional measures and task performance, the roles of CR were tested using path analysis. Results supported both mechanistic theories of CR and the use of our general theoretical model.