A novel encoding hypothesis that explains proactive inhibition in the Brown-Peterson paradigm was developed and tested in three experiments. This hypothesis argues that initial recall on each trial activates a pool of associates and the encoding of the next trial occurs during such activation. The encoding is facilitated and leaves a weak long-term memory trace. Build-up and release of inhibition, as well as a number of other typical results, are parsimoniously accounted for by such a mechanism. In support of the hypothesis, Exps. 1 and 2 demonstrated significant accentuation of proactive inhibition with increased activation both in the presence and absence of inter-trial category relationship. Exp. 3 showed significant attenuation of proactive inhibition as activation decayed. Increase in latency of recall with increased activation was also noted.