Aerobic fitness is associated with better memory performance as well as larger volumes in memory-related brain regions in children, adolescents, and elderly. It is unclear if aerobic exercise also influences learning and memory functional neural circuitry. Here, we examine brain activity in 17 high-fit (HF) and 17 low-fit (LF) adolescents during a subsequent memory encoding paradigm using fMRI. Despite similar memory performance, HF and LF youth displayed a number of differences in memory-related and default mode (DMN) brain regions during encoding later remembered versus forgotten word pairs. Specifically, HF youth displayed robust deactivation in DMN areas, including the ventral medial PFC and posterior cingulate cortex, whereas LF youth did not show this pattern. Furthermore, LF youth showed greater bilateral hippocampal and right superior frontal gyrus activation during encoding of later remembered versus forgotten word pairs. Follow-up task-dependent functional correlational analyses showed differences in hippocampus and DMN activity coupling during successful encoding between the groups, suggesting aerobic fitness during adolescents may impact functional connectivity of the hippocampus and DMN during memory encoding. To our knowledge, this study is the first to examine the influence of aerobic fitness on hippocampal function and memory-related neural circuitry using fMRI. Taken together with previous research, these findings suggest aerobic fitness can influence not only memory-related brain structure, but also brain function.