Abstract Although hemispheric lateralization of creativity has been a longstanding topic of debate, the underlying neurocognitive mechanism remains poorly understood. Here we designed 2 types of novel stimuli—“novel useful and novel useless,” adapted from “familiar useful” designs taken from daily life—to demonstrate how the left and right medial temporal lobe (MTL) respond to novel designs of different usefulness. Taking the “familiar useful” design as a baseline, we found that the right MTL showed increased activation in response to “novel useful” designs, followed by “novel useless” ones, while the left MTL only showed increased activation in response to “novel useful” designs. Calculating an asymmetry index suggests that usefulness processing is predominant in the left MTL, whereas the right MTL is predominantly involved in novelty processing. Moreover, the left parahippocampal gyrus (PHG) showed stronger functional connectivity with the anterior cingulate cortex when responding to “novel useless” designs. In contrast, the right PHG showed stronger connectivity with the amygdala, midbrain, and hippocampus. Critically, multivoxel representational similarity analyses revealed that the left MTL was more effective than the right MTL at distinguishing the usefulness differences in novel stimuli, while representational patterns in the left PHG positively predicted the post-behavior evaluation of “truly creative” products. These findings suggest an apparent dissociation of the left and right MTL in integrating the novelty and usefulness information and novel associative processing during creativity evaluation, respectively. Our results provide novel insights into a longstanding and controversial question in creativity research by demonstrating functional lateralization of the MTL in processing novel associations.