Throughout our lives we acquire general knowledge about the world (semantic memory) while also retaining memories of specific events (episodic memory). Although these two forms of memory have been dissociated on the basis of neuropsychological data, it is clear that they typically function together during normal cognition. The goal of the present study was to investigate this interaction. One influence of semantic memory on episodic retrieval is ‘Levels Of Processing’; recognition is enhanced when stimuli are processed in a semantically meaningful way. Studies examining this semantic processing advantage have largely concluded that semantic memory augments episodic retrieval primarily by enhancing recollection. The present study provides strong evidence for an alternative relationship between semantic and episodic memory. We employed a manipulation of the semantic coherence of to-be-remembered information (semantically related vs. unrelated word pairs) during an associative recognition memory test. Results revealed that associative recognition is significantly enhanced for semantically coherent material, and behavioral estimates (using the process dissociation procedure) demonstrated concomitant changes in the contribution of familiarity to retrieval. Neuroimaging data (event-related potentials recorded at test) also revealed a significant increase in familiarity based retrieval. The electrophysiological correlate of familiarity (the mid-frontal ERP old/new effect) was larger for semantically related compared to unrelated word pairs, but no difference was present in the electrophysiological correlate of recollection (the left parietal old/new effect). We conclude that semantic memory and episodic memory do indeed interact in normal functioning, and not only by modulating recollection, but also by enhancing familiarity. (c) 2006 Elsevier Inc. All rights reserved.