This chapter presents concepts describing the neuroanatomy and physiology supporting consciousness and declarative (conscious) memory. The relationships between sedation, anesthesia, and memory are elaborated, with emphasis placed on the differences between drug-induced sedation and amnesia. Parallels to sleep physiology are discussed. Memory processes important in learning information from the outside world to form a permanent conscious memory are described in some detail, and how the interaction of drug-induced amnestic and sedative properties impairs these processes is presented. A key concept is that amnestic drugs may allow conscious memories to be nascent formed (encoded), but these memory traces are quickly forgotten, likely as a result of drug-mediated interference with consolidation processes. A review of commonly used sedative and anesthetic agents is undertaken with emphasis on their effects on conscious memory. Propofol, midazolam, and likely ketamine are true amnestic agents. Dexmedetomidine likely has mainly sedative effects. Finally, a number of pediatric case studies are presented to illustrate the clinical implications of amnestic versus sedative drug actions. Preventing unexpected intraoperative awareness with recall is emphasized, with some recommendations on how to manage such a situation.