It is becoming increasingly clear that demanding cognitive tasks rely on an extended network engaging task-relevant areas and, importantly, disengaging task-irrelevant areas. Given that alpha activity (8–12 Hz) has been shown to reflect the disengagement of task-irrelevant regions in attention and working memory tasks, we here ask if alpha activity plays a related role for long-term memory formation. Subjects were instructed to encode and maintain the order of word sequences while the ongoing brain activity was recorded using magnetoencephalography (MEG). In each trial, three words were presented followed by a 3.4 s rehearsal interval. Considering the good temporal resolution of MEG this allowed us to investigate the word presentation and rehearsal interval separately. The sequences were grouped in trials where word order either could be tested immediately (working memory trials; WM) or later (LTM trials) according to instructions. Subjects were tested on their ability to retrieve the order of the three words. The data revealed that alpha power in parieto-occipital regions was lower during word presentation compared to rehearsal. Our key finding was that parieto-occipital alpha power during the rehearsal period was markedly stronger for successfully than unsuccessfully encoded LTM sequences. This subsequent memory effect demonstrates that high posterior alpha activity creates an optimal brain state for successful LTM formation possibly by actively reducing parieto-occipital activity that might interfere with sequence encoding. Hum Brain Mapp, 2011. © 2010 Wiley Periodicals, Inc.