Medial temporal brain regions such as the hippocampal formation and parahippocampal cortex have been generally implicated in navigation *RF 1-6* and visual memory [7-9]. However, the specific function of each of these regions is not yet clear. Here we present evidence that a particular area within human parahippocampal cortex is involved in a critical component of navigation: perceiving the local visual environment. This region, which we name the 'parahippocampal place area' (PPA), responds selectively and automatically in functional magnetic resonance imaging (fMRI) to passively viewed scenes, but only weakly to single objects and not at all to faces. The critical factor for this activation appears to be the presence in the stimulus of information about the layout of local space. The response in the PPA to scenes with spatial layout but no discrete objects (empty rooms) is as strong as the response to complex meaningful scenes containing multiple objects (the same rooms furnished) and over twice as strong as the response to arrays of multiple objects without three-dimensional spatial context (the furniture from these rooms on a blank background). This response is reduced if the surfaces in the scene are rearranged so that they no longer define a coherent space. We propose that the PPA represents places by encoding the geometry of the local environment.