Memory consolidation is promoted by sleep. However, there is also evidence for consolidation into long-term memory during wakefulness via processes that preferentially affect nonhippocampal representations. We compared, in rats, the effects of 2-h postencoding periods of sleep and wakefulness on the formation of long-term memory for objects and their associated environmental contexts. We employed a novel-object recognition (NOR) task, using object exploration and exploratory rearing as behavioral indicators of these memories. Remote recall testing (after 1 wk) confirmed significant long-term NOR memory under both conditions, with NOR memory after sleep predicted by the occurrence of EEG spindle–slow oscillation coupling. Rats in the sleep group decreased their exploratory rearing at recall testing, revealing successful recall of the environmental context. By contrast, rats that stayed awake after encoding showed equally high levels of rearing upon remote testing as during encoding, indicating that context memory was lost. Disruption of hippocampal function during the postencoding interval (by muscimol administration) suppressed long-term NOR memory together with context memory formation when animals slept, but enhanced NOR memory when they were awake during this interval. Testing remote recall in a context different from that during encoding impaired NOR memory in the sleep condition, while exploratory rearing was increased. By contrast, NOR memory in the wake rats was preserved and actually superior to that after sleep. Our findings indicate two distinct modes of long-term memory formation: Sleep consolidation is hippocampus dependent and implicates event-context binding, whereas wake consolidation is impaired by hippocampal activation and strengthens context-independent representations.