The medial temporal lobe (MTL) is crucial for declarative memory formation, but the function of its subcomponents in associative memory formation remains controversial. Most functional imaging studies on this topic are based on a stepwise approach comparing a condition with and one without associative encoding. Extending this approach we applied additionally a parametric analysis by varying the amount of associative memory formation. We found a hippocampal subsequent memory effect of almost similar magnitude regardless of the amount of associations formed. By contrast, subsequent memory effects in rhinal and parahippocampal cortices were parametrically and positively modulated by the amount of associations formed. Our results indicate that the parahippocampal region supports associative memory formation as tested here and the hippocampus adds a general mnemonic operation. This pattern of results might suggest a new interpretation. Instead of having either a fixed division of labor between the hippocampus (associative memory formation) and the rhinal cortex (non-associative memory formation) or a functionally unitary MTL system, in which all substructures are contributing to memory formation in a similar way, we propose that the location where associations are formed within the MTL depends on the kind of associations bound: If visual single-dimension associations, as used here, can already be integrated within the parahippocampal region, the hippocampus might add a general purpose mnemonic operation only. In contrast, if associations have to be formed across widely distributed neocortical representations, the hippocampus may provide a binding operation in order to establish a coherent memory.