Going through life, our senses perceive a continuous flow of information. Yet when we reminisce about the past, we remember experiences as discrete events. How does this occur? A leading theory (Event Segmentation Theory) suggests that salient changes result in prediction error (a failure to predict the immediate future), and are interpreted as boundaries between events. This, in turn, is thought to drive encoding of the preceding event to memory, while cleaning the slate for new information. I will discuss evidence supporting this theory, demonstrating that the hippocampus – a brain region strongly identified with formation of new memories – is particularly sensitive to the occurrence of event boundaries in naturalistic experience.