The lateral prefrontal cortex is critical for the control and organization of information in working memory. In certain situations, effective reorganization can attenuate task difficulty, suggesting a dissociation between lateral prefrontal activity and basic memory demand. In a verbal working memory task, we investigated the enhancement of performance that occurs when incoming information can be reorganized into higher-level groups or chunks. In the fMRI scanner, volunteers heard and repeated a sequence of digits. Mathematically structured sequences, encouraging 'chunking', were compared with unstructured, random sequences. Though structured sequences were easier to remember, fMRI showed increased lateral prefrontal activation for these sequences. Specifically, both the dorsolateral and ventrolateral prefrontal cortices were activated preferentially for the structured sequences during encoding. When visual stimuli that can be chunked using spatial structure are used, similar results are observed. These results demonstrate that cognitively less demanding tasks may elicit greater lateral prefrontal recruitment. Thus, the lateral prefrontal cortex appears to play a general role in strategically recoding information from memory, in order to optimize performance.