Studies of amnesia have demonstrated that the hippocampus is necessary for long-term memory, but its precise role in memory is unknown. We designed a positron emission tomography experiment with tailored encoding and retrieval tasks that permitted the isolation of different mnemonic functions theorized to be mediated by the hippocampus. These functions included encoding single items, establishing interitem associations, novelty detection, and retrieving recently formed associations. Of these, we found hippocampal and parahippocampal activation only during associative learning. Our results indicate that the hippocampal formation may be particularly involved in the establishment of associations among components of an episode in memory.