Recent findings have significantly advanced our understanding the mechanisms of memory formation. Most of these advances stemmed from behavioural pharmacology research involving, particularly, the localized infusion of drugs with specific molecular actions into specific brain regions. This approach has revealed brain structures involved in different memory types and the main neurotransmitter systems and sequence of metabolic cascades that participate in memory consolidation. Biochemical studies and, in several cases, studies of genetically manipulated animals, in which receptors or enzymes affected by the various drugs were absent or overexpressed, have complemented the pharmacological research. Although most studies have concentrated on the involvement of the hippocampus, many have also investigated the entorhinal cortex, other regions of the cortex, and the amygdala. Behavioural pharmacology has been of crucial importance in establishing the major neurohumoral and hormonal systems involved in the modulation of memory formation. These systems act on specific steps of memory formation in the hippocampus and in the entorhinal, parietal, and cingulate cortex. A specialized system mediated by the basolateral amygdaloid nucleus, and involving several neuromodulatory systems, is activated by emotional arousal and serves to regulate memory formation in other brain regions. The core mechanisms involved in the formation of explicit (declarative) memory are in many respects similar to those of long-term potentiation (LTP), particularly in the hippocampus. However, there are also important differences between memory formation and LTP. Memory formation involves numerous modulatory influences, the co-participation of various brain regions other than the hippocampus, and some properties that are specific to memory and absent in LTP (i.e. flexibility of response). We discuss the implications of these similarities and differences for understanding the neural bases of memory.