Relational memory, the flexible ability to generalize across existing stores of information, is a fundamental property of human cognition. Little is known, however, about how and when this inferential knowledge emerges. Here, we test the hypothesis that human relational memory develops during offline time periods. Fifty-six participants initially learned five "premise pairs" (A>B, B>C, C>D, D>E, and E>F). Unknown to subjects, the pairs contained an embedded hierarchy (A>B>C>D>E>F). Following an offline delay of either 20 min, 12 hr (wake or sleep), or 24 hr, knowledge of the hierarchy was tested by examining inferential judgments for novel "inference pairs" (B>D, C>E, and B>E). Despite all groups achieving near-identical premise pair retention after the offline delay (all groups, >85%; the building blocks of the hierarchy), a striking dissociation was evident in the ability to make relational inference judgments: the 20-min group showed no evidence of inferential ability (52%), whereas the 12- and 24-hr groups displayed highly significant relational memory developments (inference ability of both groups, >75%; P < 0.001). Moreover, if the 12-hr period contained sleep, an additional boost to relational memory was seen for the most distant inferential judgment (the B>E pair; sleep = 93%, wake = 69%, P = 0.03). Interestingly, despite this increase in performance, the sleep benefit was not associated with an increase in subjective confidence for these judgments. Together, these findings demonstrate that human relational memory develops during offline time delays. Furthermore, sleep appears to preferentially facilitate this process by enhancing hierarchical memory binding, thereby allowing superior performance for the more distant inferential judgments, a benefit that may operate below the level of conscious awareness.