Everyday experience requires rapid and automatic integration of incoming stimuli with previously stored knowledge. Prior knowledge can help to construct a general “situation model” of the event, as well as aid comprehension of an ongoing narrative. Using fMRI in healthy adult humans, we investigated processing of videos whose locations and characters were always familiar but whose narratives were either a continuation or noncontinuation of an earlier video (high context (HC) or low context (LC), respectively). Responses in parahippocampal gyrus and retrosplenial cortex were composed of an initial transient, locked to the video onsets, followed by a period of lower amplitude activation that was greater in the LC condition. This may reflect rapid processing of core components of situation models such as location and characters and more gradual incorporation of their narrative themes. By contrast, activity increases in left hemisphere middle temporal gyrus (MTG), angular gyrus, and inferior frontal gyrus were maintained throughout the videos and were higher for HC versus LC videos. Further, activity in the left MTG peaked earlier in the HC condition. We suggest that these regions support representations of the specific interlinked concepts necessary to comprehend an ongoing narrative, which are already established for the HC videos.