Pattern separation, the ability to independently represent and store similar experiences, is a crucial facet of episodic memory. Growing evidence suggests that the hippocampus possesses unique circuitry that is computationally capable of resolving mnemonic interference by using pattern separation. In this Review, we discuss recent advances in the understanding of this process and evaluate the caveats and limitations of linking across animal and human studies. We summarize clinical and translational studies using methods that are sensitive to pattern separation impairments, an approach that stems from the fact that the hippocampus is a major site of disruption in many brain disorders. We critically evaluate the assumptions that guide fundamental and translational studies in this area. Finally, we suggest guidelines for future research and offer ways to overcome potential interpretational challenges to increase the utility of pattern separation as a construct that can further understanding of both memory processes and brain disease.