Intracellular iron is essential for many neurobiological mechanisms. However, at high concentrations, iron may induce oxidative stress and inflammation. Brain iron overload has been shown in various neurodegenerative disorders and in normal aging. Elevated brain iron in old age may trigger brain dysfunction and concomitant cognitive decline. However, the exact mechanism underlying the deleterious impact of iron on brain function in aging is unknown. Here, we investigated the role of iron on brain function across the adult lifespan from 187 healthy participants (20-79 years old, 99 women) who underwent fMRI scanning while performing a working-memory n-back task. Iron content was quantified using R2* relaxometry, whereas neuroinflammation was estimated using myo-inositol measured by magnetic resonance spectroscopy. Striatal iron increased non-linearly with age, with linear increases at both ends of adulthood. Whereas higher frontostriatal activity was related to better memory performance independent of age, the link between brain activity and iron differed across age groups. Higher striatal iron was linked to greater frontostriatal activity in younger, but reduced activity in older adults. Further mediation analysis revealed that, after age 40, iron provided unique and shared contributions with neuroinflammation to brain activations, such that neuroinflammation partly mediated brain-iron associations. These findings promote a novel mechanistic understanding of how iron may exert deleterious effects on brain function and cognition with advancing age.