The main goal of the present fMRI-study was to identify the neural correlates underlying the successful encoding of words which can subsequently be freely recalled or recognized but not recalled. We were particularly interested in common as well as distinct neural substrates of both retrieval modes. To assess qualitatively differently activated brain areas, categorical subsequent memory analyses were applied. In addition, we used linear parametric modulation to detect brain regions associated with "memory-strength". Our findings suggest that the successful verbal encoding of words, which were recognized but not recalled relies on a subset of the regions engaged during successful encoding of freely recalled words. Furthermore, it seems to be dependent on the magnitude of relational binding in a prefrontal-hippocampal circuit whether a word can subsequently be recalled freely or only recognized.