Information that is congruent with existing knowledge (a schema) is usually better remembered than less congruent information. Only recently, however, has the role of schemas in memory been studied from a systems neuroscience perspective. Moreover, incongruent (novel) information is also sometimes better remembered. Here, we review lesion and neuroimaging findings in animals and humans that relate to this apparent paradoxical relationship between schema and novelty. In addition, we sketch a framework relating key brain regions in medial temporal lobe (MTL) and medial prefrontal cortex (mPFC) during encoding, consolidation and retrieval of information as a function of its congruency with existing information represented in neocortex. An important aspect of this framework is the efficiency of learning enabled by congruency-dependent MTL–mPFC interactions.