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Two experiments explored the neural mechanisms underlying the learning and consolidation of novel spoken words. In Experiment 1, participants learned two sets of novel words on successive days. A subsequent recognition test revealed high levels of familiarity for both sets. However, a lexical decision task showed that only novel words learned on the previous day engaged in lexical competition with similar-sounding existing words. Additionally, only novel words learned on the previous day exhibited faster repetition latencies relative to unfamiliar controls. This overnight consolidation effect was further examined using fMRI to compare neural responses to existing and novel words learned on different days prior to scanning (Experiment 2). This revealed an elevated response for novel compared with existing words in left superior temporal gyrus (STG), inferior frontal and premotor regions, and right cerebellum. Cortical activation was of equivalent magnitude for unfamiliar novel words and items learned on the day of scanning but significantly reduced for novel words learned on the previous day. In contrast, hippocampal responses were elevated for novel words that were entirely unfamiliar, and this elevated response correlated with postscanning behavioral measures of word learning. These findings are consistent with a dual-learning system account in which there is a division of labor between medial-temporal systems that are involved in initial acquisition and neocortical systems in which representations of novel spoken words are subject to overnight consolidation.