Cognitive impairment is prevalent in affective disorders. Currently, there is a lack of effective treatment options, which is partly due to limited insight into their neural underpinnings and poor transfer to everyday life. Integrating neuroimaging measures in cognition trials to identify neurocircuitry biomarkers is crucial for treatment development. We pooled baseline data from two clinical trials to validate a novel functional magnetic resonance imaging (fMRI) paradigm simulating real-life verbal learning and memory tasks. Healthy participants with no psychiatric history (n = 34) underwent fMRI and an ecologically valid virtual reality-based verbal memory task. During fMRI, they performed an ecologically valid paradigm involving encoding and recognition of a grocery shopping list. Whole-brain analyses assessed task-related activation in key neural networks. Neural underpinnings of memory encoding involved the hippocampus, prefrontal, temporal, occipital, and parietal regions, and caudate. Recognition task activation encompassed a network of frontal, parietal, temporal, and occipital regions. Positive associations were found between encoding-related activity in the inferior temporal gyrus and lateral occipital cortex and the number of correctly recalled grocery items. This study introduces and validates a novel fMRI paradigm for assessing real-life verbal learning and memory abilities. The identified neural underpinnings highlight the involvement of diverse brain regions in encoding and recognition processes that may be implemented in future investigations of the neural correlates of memory impairment and improvement.