It is well established in nonhuman primates that the medial temporal lobe (MTL) structures, the hippocampus and the entorhinal and perirhinal cortices, are necessary for declarative memory encoding. In humans, the neuropathological and neuropsychological changes in early Alzheimer's disease (AD) further support a role for the rhinal cortex in the consolidation of new events into long-term memory. Little is known, however, regarding the function of the rhinal cortex in humans in vivo. To examine the participation of the interconnected MTL structures as well as the whole-brain network of activated brain areas in visual associative long-term memory, functional magnetic resonance imaging (fMRI) was used to determine the brain regions that are activated during encoding and retrieval of paired pictures in 12 young control subjects. The most striking finding in the MTL activation pattern was the consistent activation of the perirhinal cortex in the encoding-baseline and encoding-retrieval comparisons with a strict statistical threshold (P < 0.00001). In contrast, no perirhinal cortex activation was detected in the retrieval-baseline or retrieval-encoding comparisons even with a low statistical threshold (P < 0.05). The location of the perirhinal activation area was in the transentorhinal part of the perirhinal cortex, in the medial bank of the collateral sulcus. The hippocampus and the more posterior parahippocampal gyrus were activated in both encoding and retrieval conditions. During the encoding processing, MTL activations were more consistent and the hippocampal activation area located more anteriorly than during retrieval. The frontal, parietal, temporal, and occipital association cortices were also activated in the encoding-baseline and retrieval-baseline comparisons. The data suggest that encoding, but not retrieval, of novel picture pairs activates the perirhinal cortex. To our knowledge, this is the first fMRI study reporting encoding activation in this transentorhinal part of the perirhinal cortex, the site of the very earliest neuropathological changes in AD.