Emotional experiences are typically remembered with a greater sense of recollection than neutral experiences, but memory benefits for emotional items do not typically extend to their source contexts. Item and source memory have been attributed to different subregions of the medial temporal lobes (MTL), but it is unclear how emotional item recollection fits into existing models of MTL function and, in particular, what is the role of the hippocampus. To address these issues, we used high-resolution functional magnetic resonance imaging (fMRI) to examine MTL contributions to successful emotional item and context encoding. The results showed that emotional items were recollected more often than neutral items. Whereas amygdala and perirhinal cortex (PRC) activity supported the recollection advantage for emotional items, hippocampal and parahippocampal cortex activity predicted subsequent source memory for both types of items, reflecting a double dissociation between anterior and posterior MTL regions. In addition, amygdala activity during encoding modulated the relationships of PRC activity and hippocampal activity to subsequent item recollection and source memory, respectively. Specifically, whereas PRC activity best predicted subsequent item recollection when amygdala activity was relatively low, hippocampal activity best predicted source memory when amygdala activity was relatively high. We interpret these findings in terms of complementary compared to synergistic amygdala-MTL interactions. The results suggest that emotion-related enhancements in item recollection are supported by an amygdala-PRC pathway, which is separable from the hippocampal pathway that binds items to their source context.