Almost all studies probing neural activity underlying the declarative memory system in humans have investigated either memory encoding or retrieval. Here, however, we suggest integrating encoding and retrieval operations into a single operation executed by the rhinal cortex. The more familiar an item is, the less rhinal processing it requires and the less vigorously it is encoded into memory. Given the anatomical position and the functional properties of the rhinal cortex, this operation fulfills an essential task: it optimally allocates limited encoding resources away from familiar information and towards novel information. We propose a rhinal processing stage that optimizes the declarative memory system by fully integrating encoding and retrieval operations into a single 'gatekeeper' operation.