Functional MRI has demonstrated differences in response to memory performance based on risk for Alzheimer's disease (AD). The current study compared blood oxygen level dependent (BOLD) functional MRI response with arterial spin labeling (ASL) perfusion response during an associative encoding task and resting perfusion signal in different risk groups for AD. Thirteen individuals with a positive family history of AD and at least one copy of the apolipoprotien E epsilon4 (APOE4) gene (high risk) were compared to ten individuals without these risk factors (low risk). In the medial temporal lobes (MTLs) the high risk group had an elevated level of resting perfusion, and demonstrated decreased fractional BOLD and perfusion responses to the encoding task. However, there was no difference in the absolute cerebral blood flow during the task. These data demonstrate that individuals with increased risk for Alzheimer's disease have elevated MTL resting cerebral blood flow, which significantly influences apparent differences in BOLD activations. BOLD activations should be interpreted with caution, and do not necessarily reflect differences in neuronal activation.