The detection and processing of novel information encountered as we explore our environment is crucial for learning and adaptive behavior. The human hippocampus has been strongly implicated in laboratory tests of novelty detection and episodic memory, but has been less well studied during more ethological tasks such as spatial navigation, typically used in animals. We examined fMRI BOLD activity as a function of environmental and object novelty as humans performed an object-location virtual navigation task. We found greater BOLD response to novel relative to familiar environments in the hippocampus and adjacent parahippocampal gyrus. Object novelty was associated with increased activity in the posterior parahippocampal/fusiform gyrus and anterior hippocampus extending into the amygdala and superior temporal sulcus. Importantly, whilst mid-posterior hippocampus was more sensitive to environmental novelty than object novelty, the anterior hippocampus responded similarly to both forms of novelty. Amygdala activity showed an increase for novel objects that decreased linearly over the learning phase. By investigating how participants learn and use different forms of information during spatial navigation, we found that medial temporal lobe (MTL) activity reflects both the novelty of the environment and of the objects located within it. This novelty processing is likely supported by distinct, but partially overlapping, sets of regions within the MTL. © 2014 The Authors. Hippocampus Published by Wiley Periodicals, Inc.