While many theories assume that sleep is critical in stabilizing and strengthening memories, our recent behavioral study (Liu & Ranganath, 2021, Psychonomic Bulletin & Review, 28[6], 2035–2044) suggests that sleep does not simply stabilize memories. Instead, it plays a more complex role, integrating information across two temporally distinct learning episodes. In the current study, we simulated the results of Liu and Ranganath (2021) using our biologically plausible computational model, TEACH, developed based on the complementary learning systems (CLS) framework. Our model suggests that when memories are activated during sleep, the reduced influence of temporal context establishes connections across temporally separated events through mutual training between the hippocampus and neocortex. In addition to providing a compelling mechanistic explanation for the selective effect of sleep, this model offers new examples of the diverse ways in which the cortex and hippocampus can interact during learning.