Glucocorticoids (GCs, cortisol in human) are associated with impairments in declarative memory retrieval. Brain regions hypothesized to mediate these effects are the hippocampus and prefrontal cortex (PFC). Our aim was to use fMRI in localizing the effects of GCs during declarative memory retrieval. Therefore, we tested memory retrieval in 21 young healthy males in a randomized placebo-controlled crossover design. Participants encoded word lists containing neutral and emotional words 1 h prior to ingestion of 20 mg hydrocortisone. Memory retrieval was tested using an old/new recognition paradigm in a rapid event-related design. It was found that hydrocortisone decreased brain activity in both the hippocampus and PFC during successful retrieval of neutral words. These observations are consistent with previous animal and human studies suggesting that glucocorticoids modulate both hippocampal and prefrontal brain regions that are crucially involved in memory processing.