Background: Memory impairment is frequent in multiple sclerosis (MS), but it is unclear what functional brain changes underlie this cognitive deterioration. Objective: To investigate functional hippocampal activation and connectivity, in relation to memory performance in MS. Methods: Structural and functional magnetic resonance imaging data were acquired for 57 MS patients and 28 healthy controls (HCs), yielding hippocampal measures of volume, lesions, functional activation during a memory task and functional connectivity at rest. Memory function was based on two subtests of a larger neuropsychological test battery and related to hippocampal neuroimaging measures, using linear regression. Results: Hippocampal volume was lower in MS patients, as compared to HCs. In MS, hippocampal activation during the task was increased in cognitively preserved, but decreased in cognitively impaired, patients. Increased hippocampal connectivity was detected in MS patients, as compared to HCs, between the left hippocampus and the right posterior cingulate. Memory impairment in MS was explained (adjusted R2 = 0.27) by male gender, decreased hippocampal activation and increased hippocampal connectivity (p = 0.001). Conclusions: Decreased activation of the hippocampus, increased connectivity and male gender were associated with worse memory performance in MS. These results indicate that increased activation and increased connectivity do not always coincide, and relate differently to cognitive dysfunction in MS.