Prediction error-related memory enhancement depends on the neural state surrounding the prediction error event

Prediction errors (PEs) can enhance memory for preceding events. While such PE-related memory enhancements are critical for understanding adaptive memory, their underlying mechanisms are not fully understood. Using electroencephalography (EEG) and neuro-navigated transcranial magnetic stimulation (TMS) in combination with multivariate pattern analysis, this pre-registered study aimed to elucidate the brain mechanisms underlying PE effects on memory. Specifically, we tested whether PEs trigger a neural reactivation of the preceding stimulus and whether the PE-induced effects on memory depend on the specific neural state before the PE. We also examined whether inhibitory TMS over the superior parietal cortex (SPC) reduces PE effects on memory. A total of 118 participants (male and female) received inhibitory theta-burst or sham stimulation over the SPC before completing an incidental encoding-fear learning task. In this task, participants learned trial-unique stimuli and predicted whether these would be followed by an electric shock, while EEG was recorded. Recognition memory was tested 24 hours later. Our findings show that signed PEs enhance subsequent memory, depending on theta and alpha oscillations as well as neural category reactivation shortly before the PE. Moreover, this memory enhancement was associated with post-PE theta but not with PE-driven category reinstatement. Theta-burst stimulation over the SPC led to a more conservative mnemonic response bias but left the PE effect on memory unaffected. Together, our findings reveal that PE effects on memory formation are influenced by neural states and representations surrounding the PE, providing new insights into the neural mechanisms of adaptive memory formation. Significance Statement In daily life, our brain prioritizes events for memory storage that help predict relevant outcomes. Recent research revealed that prediction errors (PEs) – mismatches between anticipated and actual outcomes – linked to rewarding or aversive events enhance memory for preceding stimuli, highlighting their key role in adaptive memory formation. However, the underlying brain mechanisms remain unclear. This study demonstrates that the impact of PEs on memory depends on the neural category representation and brain oscillations shortly before and after the PE event. These findings provide novel insights into how neural states surrounding PEs influence memory formation, with potential implications for understanding maladaptive memory processes in fear-related disorders.