BDNF plays a critical role in activity-dependent neuroplasticity underlying learning and memory in the hippocampus. A frequent single nucleotide polymorphism in the targeting region of the human BDNF gene (val66met) has been associated with abnormal intracellular trafficking and regulated secretion of BDNF in cultured hippocampal neurons transfected with the met allele. In addition, the met allele has been associated with abnormal hippocampal neuronal function as well as impaired episodic memory in human subjects, but a direct effect of BDNF alleles on hippocampal processing of memory has not been demonstrated. We studied the relationship of the BDNF val66met genotype and hippocampal activity during episodic memory processing using blood oxygenation level-dependent functional magnetic resonance imaging and a declarative memory task in healthy individuals. Met carriers exhibited relatively diminished hippocampal engagement in comparison with val homozygotes during both encoding and retrieval processes. Remarkably, the interaction between the BDNF val66met genotype and the hippocampal response during encoding accounted for 25% of the total variation in recognition memory performance. These data implicate a specific genetic mechanism for substantial normal variation in human declarative memory and suggest that the basic effects of BDNF signaling on hippocampal function in experimental animals are important in humans.