The ability to identify and react to novelty within the environment is fundamental to survival. Computational models emphasize the potential role of the hippocampus in novelty detection, its unique anatomical circuitry making it ideally suited to act as a comparator between past and present experience. The hippocampus, therefore, is viewed to detect associative mismatches between what is expected based on retrieval of past experience and current sensory input. However, direct evidence that the human hippocampus performs such operations is lacking. We explored brain responses to novel sequences of objects using functional magnetic resonance imaging (fMRI), while subjects performed an incidental target detection task. Our results demonstrate that hippocampal activation was maximal when prior predictions concerning which object would appear next in a sequence were violated by sensory reality. In so doing, we establish the biological reality of associative match-mismatch computations within the human hippocampus, a process widely held to play a cardinal role in novelty detection. Our results also suggest that the hippocampus may generate predictions about how future events will unfold, and critically detect when these expectancies are violated, even when task demands do not require it. The present study also offers broader insights into the nature of essential computations carried out by the hippocampus, which may also underpin its unique contribution to episodic memory.