Performing a secondary task concurrently with a study task has a detrimental effect on later memory for studied items. To investigate the mechanisms underlying this effect, the processing resources available for an incidental encoding task were varied by manipulating secondary task difficulty. fMRI data were acquired as volunteers (n = 16) made animacy decisions to visually presented study words while concurrently performing either an easy or a hard auditory monitoring task. “Subsequent memory effects”-greater activity at study for words later remembered versus words later forgotten-were identified in the left ventral inferior frontal gyrus and the left anterior hippocampus. These effects did not vary according to whether the encoding task was performed concurrently with the easy or the hard secondary task. However, as secondary task difficulty increased, study-item activity declined and auditory-item activity increased in dorsolateral prefrontal and superior parietal regions that have been implicated in the support of executive and control functions. The findings suggest that dividing attention during encoding influences the probability of engaging the encoding operations that support later episodic memory, but does not alter the nature of the operations themselves. The findings further suggest that the probability of engaging these encoding operations depends on the level of general processing resources engaged in service of the study task.