We present a case of acute alcohol-induced Korsakoff amnesia. A severe amnestic-confabulatory syndrome characterized the early clinical status. The initial neuropsychological tests demonstrated severe learning deficits plus impaired performance on many, but not all, tests of frontal lobe function. Single-photon emission CT (SPECT) at this stage showed hypoperfusion in the orbital and medical frontal regions and the medial diencephalic area. Four months later, the patient's amnesia remained but there was no confabulation. Repeat neuropsychological tests confirmed an ongoing severe amnesia, but performance on the frontal lobe tests now was normal. Repeat SPECT showed a return to normal perfusion in the frontal brain areas but little improvement in the medial diencephalic region. These findings along with data from the clinical literature suggest that confabulation results from dysfunction of orbital and a medial frontal cortex.