We examined how encoding and retrieval processes were affected by manipulations of attention, and whether the degree of semantic relatedness between words in the memory and distracting task modulated these effects. We also considered age and bilingual status as mediating factors. Monolingual and bilingual younger and older adults studied a list of words from a single semantic category presented auditorily, and later free recalled them aloud. During either study or retrieval, participants concurrently performed a distracting task requiring size decisions to words from either the same or a different semantic category as the words in the memory task. The greatest disruptions of memory from divided attention (DA) were for encoding rather than retrieval. The effect of semantic relatedness was significant only for DA at encoding. Older age and bilingualism were associated with lower recall scores in all conditions, but these factors did not influence the magnitude of memory interference. The results suggest that encoding is more sensitive to semantic similarity in a distracting task than is retrieval. The role of attention at encoding and retrieval is discussed.