Deficits in memory function are an incapacitating aspect of various psychiatric and neurological disorders. Animal studies have recently provided strong evidence for involvement of the endocannabinoid (eCB) system in memory function. Neuropsychological studies in humans have shown less convincing evidence but suggest that administration of cannabinoid substances affects encoding rather than recall of information. In this study, we examined the effects of perturbation of the eCB system on memory function during both encoding and recall. We performed a pharmacological MRI study with a placebo-controlled, crossover design, investigating the effects of Δ9-tetrahydrocannabinol (THC) inhalation on associative memory-related brain function in 13 healthy volunteers. Performance and brain activation during associative memory were assessed using a pictorial memory task, consisting of separate encoding and recall conditions. Administration of THC caused reductions in activity during encoding in the right insula, the right inferior frontal gyrus, and the left middle occipital gyrus and a network-wide increase in activity during recall, which was most prominent in bilateral cuneus and precuneus. THC administration did not affect task performance, but while during placebo recall activity significantly explained variance in performance, this effect disappeared after THC. These findings suggest eCB involvement in encoding of pictorial information. Increased precuneus activity could reflect impaired recall function, but the absence of THC effects on task performance suggests a compensatory mechanism. These results further emphasize the eCB system as a potential novel target for treatment of memory disorders and a promising target for development of new therapies to reduce memory deficits in humans.