Human amnesics are severely impaired in learning arbitrary associations between word pairs. This report examines the role of the hippocampal system in an analog of paired-associate learning developed for rats. Subjects with selective damage to the parahippocampal region and controls were tested on an odor-guided paired-associate task. Normal rats readily learned to distinguish paired associates from various mispairings of the same odors, whereas most animals with parahippocampal damage failed to learn. Lesioned animals were, however, able to acquire correct responses to stimulus pairs for which an association between odors was not required. These findings extend the usefulness of olfactory learning as a model for studies of higher order learning capacity in rodents and indicate that in rats, as in humans, hippocampal areas are critical for learning arbitrary nonspatial relationships between stimuli.