Most modern theories of associative learning emphasize a critical role for prediction error (PE, the difference between received and expected events). One class of theories, exemplified by the Rescorla–Wagner (1972) model, asserts that PE determines the effectiveness of the reinforcer or unconditioned stimulus (US): surprising reinforcers are more effective than expected ones. A second class, represented by the Pearce–Hall (1980) model, argues that PE determines the associability of conditioned stimuli (CSs), the rate at which they may enter into new learning: the surprising delivery or omission of a reinforcer enhances subsequent processing of the CSs that were present when PE was induced. In this mini-review we describe evidence, mostly from our laboratory, for PE-induced changes in the associability of both CSs and USs, and the brain systems involved in the coding, storage and retrieval of these altered associability values. This evidence favors a number of modifications to behavioral models of how PE influences event processing, and suggests the involvement of widespread brain systems in animals' responses to PE.