The standard model of system-level consolidation posits that the hippocampus is part of a retrieval network for recent memories. According to this theory, the memories are gradually transferred to neocortical circuits with consolidation, where the connections within this circuit grow stronger and reorganized so that redundant and/or contextual details may be lost. Thus, remote memories are based on neocortical networks and can be retrieved independently of the hippocampus. To test this model, we measured regional brain activity and connectivity during retrieval with functional magnetic resonance imaging. Subjects were trained on two sets of face-location association and were tested with two different delays, 15 min and 24 h including a whole night of sleep. We hypothesized that memory traces of the locations associated with specific faces will be linked through the hippocampus for the retrieval of recently learned association, but with consolidation, the activity and the functional connectivity between the neocortical areas will increase. We show that posterior hippocampal activity related to high-confidence retrieval decreased and neocortical activity increased with consolidation. Moreover, the connectivity between the hippocampus and the neocortical regions decreased and in turn, cortico-cortical connectivity between the representational areas increased. The results provide mechanistic support for a two-level process of the declarative memory system, involving initial representation of new associations in a network including the hippocampus and subsequent consolidation into a predominantly neocortical network.