To examine alterations in brain activation associated with pharmacologically induced memory impairment, we used functional MRI (fMRI) to study the effects of lorazepam and scopolamine on a face-name associative encoding paradigm. Ten healthy young subjects were scanned on four occasions, 2 weeks apart; they were administered i.v. saline during two placebo-scanning sessions and then alternately administered i.v. lorazepam (1 mg) or scopolamine (0.4 mg) in a double-blind, randomized, cross-over design. Both the extent and magnitude of activation within anatomic regions of interest (ROIs) were examined to determine the reproducibility of activation in the placebo sessions and the regional specificity of the pharmacologic effects. Activation within all ROIs was consistent across the two placebo scans during the encoding of novel face-name pairs (compared with visual fixation). With the administration of either lorazepam or scopolamine, significant decreases were observed in both the extent and magnitude of activation within the hippocampal, fusiform, and inferior prefrontal ROIs, but no significant alterations in activation in the striate cortex were found. Both medications impaired performance on postscan memory measures, and significant correlations between memory performance and extent of activation were found in hippocampal and fusiform ROIs. These findings suggest that pharmacologic effects can be detected with fMRI by using a reproducible experimental paradigm and that medications that impair memory also diminish activation in specific brain regions thought to subserve complex memory processes.