Face recognition skills improve steadily across childhood, yet few studies have investigated the development of the neural sources underlying these processes. We investigated the developmental changes in brain activity related specifically to face recognition, using magnetoencephalography (MEG). We studied 70 children (6-19 years) and 20 young adults. Photographs of 240 neutral faces were used in two blocks of 1-back recognition tasks; one block contained faces upright and in the other block, faces were presented inverted. MEG activity was recorded on a 151 sensor CTF/MISL system. A structural MRI was acquired for all subjects. We focussed on the repetition effects of the faces, in a 280-680 ms window, contrasting the repeated faces with the first presentation of the faces. The analyses showed reliable right hippocampal activation across all age groups, and a right inferior frontal activation that emerged for repeated, recognised faces at 10-11 years of age. The hippocampi are implicated in memory function and we demonstrate that the right hippocampus is specifically involved for face recognition. Further, we determined that this comes on-line by early school age, which is consistent with the known early maturation of the hippocampi. In contrast, we show that the right inferior frontal areas do not come on-line until later in childhood, consistent with the protracted development of the frontal cortices. These data support the hypothesis that different age groups use different strategies and neural structures for face recognition.