Episodic memory retrieval and reasoning are fundamental psychological components of our daily lives. Although previous studies have investigated the brain regions associated with these processes separately, the neural mechanisms of reasoning based on episodic memory retrieval are largely unknown. Here, we investigated the neural correlates underlying episodic memory-based reasoning using functional magnetic resonance imaging (fMRI). During fMRI scanning, subjects performed three tasks: reasoning, episodic memory retrieval, and episodic memory-based reasoning. We identified dissociable activations related to reasoning, episodic memory retrieval, and linking processes between the two. Regions related to reasoning were identified in the left ventral prefrontal cortices (PFC), and those related to episodic memory retrieval were found in the right medial temporal lobe (MTL) regions. In addition, activations predominant in the linking process between the two were found in the left dorsal and right ventral PFC. These findings suggest that episodic memory-based reasoning is composed of at least three processes, i.e., reasoning, episodic memory retrieval, and linking processes between the two, and that activation of both the PFC and MTL is crucial in episodic memory-based reasoning. These findings are the first to demonstrate that PFC and MTL regions contribute differentially to each process in episodic memory-based reasoning.