The question of whether ovarian hormone therapy can prevent or reduce age-related memory decline in menopausal women has been the subject of much recent debate. Although numerous studies have demonstrated a beneficial effect of estrogen and/or progestin therapy for certain types of memory in menopausal women, recent clinical trials suggest that such therapy actually increases the risk of cognitive decline and dementia. Because rodent models have been frequently used to examine the effects of age and/or ovarian hormone deficiency on mnemonic function, rodent models of age-related hormone and memory decline may be useful in helping to resolve this issue. This review will focus on evidence suggesting that estradiol modulates memory, particularly hippocampal-dependent memory, in young and aging female rats and mice. Various factors affecting the mnemonic response to estradiol in aging females will be highlighted to illustrate the complications inherent to studies of estrogen therapy in aging females. Avenues for future development of estradiol-based therapies will also be discussed, and it is argued that an approach to drug development based on identifying the molecular mechanisms underlying estrogenic modulation of memory may lead to promising future treatments for reducing age-related mnemonic decline.