Contemporary theories of hippocampal function suggest that both encoding and retrieval of episodic memories may be accomplished by neural circuitry embedded within the same anatomical structures, but neuroimaging support for this hypothesis has been ambiguous. Recent studies suggest that the best available indicators of hippocampal encoding and retrieval operations are selective activations due to novelty, encoding success, and recall success in a paired associate learning paradigm. In the current study, both encoding and cued recall of paired associate words were conducted during a single session of fMRI scanning. Bilateral activation in the medial temporal lobe was detected for encoding word pairs vs. a fixation baseline and for encoding novel word pairs vs. repeated word pairs. These activations were stronger in subjects who successfully memorized more word pairs. In cued recall, greater responses were seen in higher performing subjects. In lower performing subjects, responses were greater to cue words whose paired associate was correctly recalled than to cue words whose correct associate had been forgotten (or not encoded). The difference between correct and incorrect trials was more pronounced on repeated presentations of the same cue words, but not apparent on their first presentation alone. Overlap of encoding and retrieval effects was maximal in the middle of the longitudinal extent of the right hippocampus, with one additional locus of overlap outside the MTL, in left occipitotemporal cortex. The conjunction of these effects suggests that it is correct to view both encoding and recall of associative memories as functions of an integrated hippocampal system.