We used a continuous recognition procedure that included multiple presentations of test items, along with high-resolution functional magnetic resonance imaging (fMRI), to investigate the relationship between item novelty and recognition-related activity in the medial temporal lobe (MTL). In several regions of hippocampus and parahippocampal cortex, activity elicited by new items exceeded that for old items, whereas no MTL regions exhibited greater activity for old items. Critically, anatomically-distinct regions of MTL were engaged by item novelty in two different ways, as evidenced by statistically-dissociable profiles of activity. In bilateral medial hippocampus and left posterior parahippocampal cortex, activity followed a categorical profile in which it was greater for new than old items but did not differ further with additional presentations of old items. By contrast, effects in adjacent regions of right lateral hippocampus and left parahippocampal cortex were graded, whereby activity declined linearly with respect to each successive item presentation. These findings suggest that the relationship between hippocampal (and parahippocampal) activity and continuous psychological dimensions, such as item novelty, cannot be captured by a unitary function. Keywords novelty; familiarity; hippocampus; fMRI; high-resolution Consistent with human and animal lesion data implicating MTL in recognition memory (for reviews, see Brown & Aggleton, 2001;Eichenbaum et al., 2007;Squire et al., 2007), fMRI and intracranial (local field potential and single-neuron) recording studies have demonstrated that hippocampal activity is modulated by the study status of recognition test items (e.g., Grunwald et al., 1998;Heit et al., 1988; for a review of fMRI findings, see Henson, 2005). Among event-related fMRI studies employing separate study and test phases, it has occasionally been reported that correctly-recognized (old) items elicit greater hippocampal activity than correctly-rejected (new) items (e.g., Donaldson et al., 2001;Stark & Squire, 2001). More frequently, enhanced hippocampal activity has been reported for recognition test items that are accompanied by either "remember" or accurate source memory judgments, relative to when items are designated with "know" responses or lack source information (e.g., Cansino et al., 2002;Eldridge et al., 2000;Johnson & Rugg, 2007;Wheeler & Buckner, 2004;Woodruff et al., 2005;Yonelinas et al., 2005 to imply that enhanced hippocampal activity is associated with the retrieval (recollection) of qualitative information about a study episode, rather than an acontextual sense of familiarity (Rugg & Yonelinas, 2003; but see Squire et al., 2007). Of significance, however, is that other fMRI studies of recognition memory have reported greater hippocampal activity for new compared to old items (e.g., Duzel et al., 2003;Rombouts et al., 2001;. Such findings have been interpreted as evidence that the hippocampus is sensitive to stimulus novelty, with elevated activity reflecting an allocation ...