Abstract Episodic memory formation and recall are complementary processes that rely on opposing neuronal computations in the hippocampus. How this conflict is resolved in hippocampal circuits is unclear. To address this question, we obtained in vivo whole-cell patch-clamp recordings from dentate gyrus granule cells in head-fixed mice trained to explore and distinguish between familiar and novel virtual environments. We find that granule cells consistently show a small transient depolarisation upon transition to a novel environment. This synaptic novelty signal is sensitive to local application of atropine, indicating that it depends on metabotropic acetylcholine receptors. A computational model suggests that the synaptic response to novelty may bias granule cell population activity, which can drive downstream attractor networks to a new state, favouring the switch from recall to new memory formation when faced with novelty. Such a novelty-driven switch may enable flexible encoding of new memories while preserving stable retrieval of familiar ones.