Multi-compartment diffusion MRI metrics [such as metrics from free water elimination diffusion tensor imaging (FWE-DTI) and neurite orientation dispersion and density imaging (NODDI)] may reflect more specific underlying white-matter tract characteristics than traditional, single-compartment metrics [i.e., metrics from Diffusion Tensor Imaging (DTI)]. However, it remains unclear if multi-compartment metrics are more closely associated with age and/or cognitive performance than single-compartment metrics. Here we compared the associations of single-compartment [Fractional Anisotropy (FA)] and multi-compartment diffusion MRI metrics [FWE-DTI metrics: Free Water Eliminated Fractional Anisotropy (FWE-FA) and Free Water (FW); NODDI metrics: Intracellular Volume Fraction (ICVF), Orientation Dispersion Index (ODI), and CSF-Fraction] with both age and working memory performance. A functional magnetic resonance imaging (fMRI) guided, white matter tractography approach was employed to compute diffusion metrics within a network of tracts connecting functional regions involved in working memory. Ninety-nine healthy older adults (aged 60-85) performed an in-scanner working memory task while fMRI was performed and also underwent multi-shell diffusion acquisition. The network of white matter tracts connecting functionally-activated regions was identified using probabilistic tractography. Diffusion metrics were extracted from skeletonized white matter tracts connecting fMRI activation peaks. Diffusion metrics derived from both single and multi-compartment models were associated with age (p s ≤ 0.011 for FA, FWE-FA, ICVF and ODI). However, only multi-compartment metrics, specifically FWE-FA (p = 0.045) and ICVF (p = 0.020), were associated with working memory performance. Our results suggest that while most current diffusion metrics are sensitive to age, several multi-compartment metrics (i.e., FWE-FA and ICVF) appear more sensitive to cognitive performance in healthy older adults.