The ability to form long-term memories for novel events depends on information processing within the hippocampus (HC) and entorhinal cortex (EC). The HC-EC circuitry shows a quantitative segregation of anatomical directionality into different neuronal layers. Whereas superficial EC layers mainly project to dentate gyrus (DG), CA3 and apical CA1 layers, HC output is primarily sent from pyramidal CA1 layers and subiculum to deep EC layers. Here we utilize this directionality information by measuring encoding activity within HC/EC subregions with 7 T high resolution functional magnetic resonance imaging (fMRI). Multivariate Bayes decoding within HC/EC subregions shows that processing of novel information most strongly engages the input structures (superficial EC and DG/CA2-3), whereas subsequent memory is more dependent on activation of output regions (deep EC and pyramidal CA1). This suggests that while novelty processing is strongly related to HC-EC input pathways, the memory fate of a novel stimulus depends more on HC-EC output.