Context can drastically influence responses to environmental stimuli. For example, a gunshot should provoke a different response at a public park than a shooting range. Little is known about how contextual processing and neural correlates change across human development or about individual differences related to early environmental experiences. Children (N = 60; 8–19 years, 24 exposed to interpersonal violence) completed a context encoding task during fMRI scanning using a delayed match-to-sample design with neutral, happy, and angry facial cues embedded in realistic background scenes. Outside the scanner, participants completed a memory test for context-face pairings. Context memory and neural correlates of context encoding did not vary with age. Larger hippocampal volume was associated with better context memory. Posterior hippocampus was recruited during context encoding, and greater activation in this region predicted better memory for contexts paired with angry faces. Children exposed to violence had poor memory of contexts paired with angry faces, reduced hippocampal volume, and atypical neural recruitment on encoding trials with angry faces, including reduced hippocampal activation and greater functional connectivity between hippocampus and ventrolateral prefrontal cortex (vlPFC). Greater hippocampus-vlPFC connectivity was associated with worse memory for contexts paired with angry faces. Posterior hippocampus appears to support context encoding, a process that does not exhibit age-related variation from middle childhood to late adolescence. Exposure to dangerous environments in childhood is associated with poor context encoding in the presence of threat, likely due to greater vlPFC-dependent attentional narrowing on threat cues at the expense of hippocampus-dependent processing of the broader context
