Evidence indicates that sleep after learning is critical for the subsequent consolidation of human memory. Whether sleep before learning is equally essential for the initial formation of new memories, however, remains an open question. We report that a single night of sleep deprivation produces a significant deficit in hippocampal activity during episodic memory encoding, resulting in worse subsequent retention. Furthermore, these hippocampal impairments instantiate a different pattern of functional connectivity in basic alertness networks of the brainstem and thalamus. We also find that unique prefrontal regions predict the success of encoding for sleep-deprived individuals relative to those who have slept normally. These results demonstrate that an absence of prior sleep substantially compromises the neural and behavioral capacity for committing new experiences to memory. It therefore appears that sleep before learning is critical in preparing the human brain for next-day memory formation-a worrying finding considering society's increasing erosion of sleep time.