Alzheimer's disease (AD) patients show better everyday functioning in a familiar setting, but they have a reduced ability to access contextual details and episodes associated with a familiar person or environment. This suggests a dysfunction in the neural networks associated with stimulus identification. Using functional magnetic resonance imaging, we investigated the neural activity during the recognition of personally familiar and unfamiliar faces and places among AD patients and elderly controls. We did not find a group difference in the neural activity within brain areas important for perceptual familiarity recognition. Patients showed reduced activation for familiar stimuli in prefrontal brain areas known to be important for retrieving contextual information for a stimulus when compared with controls. These changes may contribute to how AD patients experience a personally familiar face or place.