Functional MRI was used to investigate brain activation in healthy volunteers during encoding of unfamiliar faces as well as during correct recognition of newly learned faces (CR) compared to correct identification of distractor faces (CF), missed alarms (not recognizing previously presented faces, MA), and false alarms (incorrectly recognizing newly presented faces, FA). Encoding was associated with frontal, occipital/fusiform, thalamic, and cerebellar activation. CR produced activation in frontal and cerebellar regions, whereas CF activated frontal and occipitotemporal regions as well as the thalamus. In contrast, MA was associated with frontal and thalamic activation, and FA with frontal activation. The CR minus CF comparison showed left lateral prefrontal and parietal activation, while no suprathreshold positive signal changes were detected when subtracting the other conditions (CR minus MA, CR minus FA, and vice versa). These results support the view that the successful episodic retrieval of newly learned faces is based on a dorsal visual stream mechanism.