The hippocampus, buried deep in the temporal lobe near the center of the brain, is only visible when the brain is dissected. It is the structure responsible for creating new memories. The hippocampus is specifically responsible for spatial memories (for example, knowing how to get from your house to school) but it is also involved in the creation of many types of short-term memories. If the hippocampus is damaged, the brain can no longer form new memories of items or events. Unfortunately, the hippocampus is one of the more vulnerable parts of the brain and is easily damaged by lack of oxygen or stroke.

One way that researchers study the function of the hippocampus is by studying people with damage to the hippocampus who suffer from amnesia, a loss of memory. Korsakoff's syndrome is caused by a thiamine deficiency and often occurs in malnourished alcoholics. The principal syndrome of Korsakoff's is a severe memory deficit. People suffering from Korsakoff's syndrome have anterograde amnesia--they are unable to form or retain new memories. For example, a man suffering from Korsakoff's may not be able to recognize someone he met only ten minutes earlier. Often, Korsakoff's patients also suffer from some retrograde amnesia--they lose some memories for events that occurred before the onset of their disease. For example, a man who developed Korsakoff's in 1970 might not have any memories after 1965; in fact, he might believe that is still was the year 1965 and he was still nineteen years old.

Many scientists debate about how memories are physically stored in the brain. One prevailing theory holds that perceptions are formed into new memories in the hippocampus, and these memories are then transferred to the association cortex for long-term storage. The neural network theory states that memories are stored in the strength of the connections between neurons; stronger connections represent associations between representations of objects or concepts.

On the neuronal level, it is generally (although not universally) believed that connections are strengthened by a process known as long-term potentiation (LTP). LTP strengthens the connections between neurons that are simultaneously active. LTP follows Hebb's rule: "Cells that fire together, wire together." For example, if you see a dog in front of a pink house every day on your way to school, the neurons representing "dog" will fire (become active) at the same time as the neurons representing "pink house." Gradually, the neurons for these two concepts will become more strongly connected at their synapses. As the connection strengthens, one neuron becomes able to activate the other. Later, when you see the pink house again, the neurons for "pink house" will fire. Their activity might be able to cause the neurons for "dog" to fire; thus, when you see a pink house, you will remember the dog that you usually see there.

The amygdala, a structure located in the most anterior section of the temporal lobe, is involved primarily in the processing of emotion. It is best known for its role in the fear response. When subjects are shown threatening pictures at a rate too fast for them to perceive the pictures consciously, they cannot report the content of the pictures, yet they show physical signs of fear, such as sweaty palms and increased heart rate, and report feeling uneasy. If subjects with damage to the amygdala are exposed to the same pictures at the same fast rate, they show no signs of fear. The amygdala can be used as a shortcut around the cortex in the case of fear- provoking stimuli. This makes evolutionary sense: if an animal can react more quickly to a threat, it has a better chance of survival. When the thalamus receives input signaling a perceived threat, it alerts the amygdala and the cortex. Since the amygdala is a closer and simpler structure, it can process the signal quickly than the cortex. The amygdala can send output signaling the body to ready the "fight or flight" response before the cortex has had time to finish processing the signal. If there is time for the cortex to process the fear-provoking input, it will send the signal from the sensory areas to the frontal lobes, where it can enter conscious awareness.