Studies in rodents have demonstrated that the integration and flexible expression of memories, necessary for transitive inference, depend on an intact hippocampus. To test this hypothesis in humans, we studied brain activation during the discrimination of a series of overlapping and non-overlapping arbitrary visual stimulus pairs. We report that transitive inference about overlapping pairs is associated with right anterior hippocampal activation, whereas recognition of non-overlapping stimulus pairs is associated with bilateral medial temporal lobe activation centered in the anterior parahippocampal gyrus. We conclude that immediate access to simple stimulus-stimulus relationships is mediated via the parahippocampal gyrus, whereas the flexible representation of memory requires the recruitment of the hippocampus.