Reward-prediction errors track the extent to which rewards deviate from expectations, and aid in learning. How do such errors in prediction interact with memory for the rewarding episode? Existing findings point to both cooperative and competitive interactions between learning and memory mechanisms. Here, we investigated whether learning about rewards in a high-risk context, with frequent, large prediction errors, would give rise to higher fidelity memory traces for rewarding events than learning in a low-risk context. Experiment 1 showed that recognition was better for items associated with larger absolute prediction errors during reward learning. Larger prediction errors also led to higher rates of learning about rewards. Interestingly we did not find a relationship between learning rate for reward and recognition-memory accuracy for items, suggesting that these two effects of prediction errors were caused by separate underlying mechanisms. In Experiment 2, we replicated these results with a longer task that posed stronger memory demands and allowed for more learning. We also showed improved source and sequence memory for items within the high-risk context. In Experiment 3, we controlled for the difficulty of reward learning in the risk environments, again replicating the previous results. Moreover, this control revealed that the high-risk context enhanced item-recognition memory beyond the effect of prediction errors. In summary, our results show that prediction errors boost both episodic item memory and incremental reward learning, but the two effects are likely mediated by distinct underlying systems.