Pattern separation, the process of transforming similar representations or memories into highly dissimilar, nonoverlapping representations, is a key component of many functions ascribed to the hippocampus. Computational models have stressed the role of the hippocampus and, in particular, the dentate gyrus and its projections into the CA3 subregion in pattern separation. We used high-resolution (1.5-millimeter isotropic voxels) functional magnetic resonance imaging to measure brain activity during incidental memory encoding. Although activity consistent with a bias toward pattern completion was observed in CA1, the subiculum, and the entorhinal and parahippocampal cortices, activity consistent with a strong bias toward pattern separation was observed in, and limited to, the CA3/dentate gyrus. These results provide compelling evidence of a key role of the human CA3/dentate gyrus in pattern separation.