The ability to learn novel items depends on brain functions that store information about items classified by their associated meanings and outcomes1-4, but the underlying neural circuit mechanisms of this process remain poorly understood. Here we show that deep layers of the lateral entorhinal cortex (LEC) contain two groups of 'item-outcome neurons': one developing activity for rewarded items during learning, and another for punished items. As mice learned an olfactory item-outcome association, we found that the neuronal population of LEC layers 5/6 (LECL5/6) formed an internal map of pre-learned and novel items, classified into dichotomic rewarded versus punished groups. Neurons in the medial prefrontal cortex (mPFC), which form a bidirectional loop circuit with LECL5/6, developed an equivalent item-outcome rule map during learning. When LECL5/6 neurons were optogenetically inhibited, tangled mPFC representations of novel items failed to split into rewarded versus punished groups, impairing new learning by mice. Conversely, when mPFC neurons were inhibited, LECL5/6 representations of individual items were held completely separate, disrupting both learning and retrieval of associations. These results suggest that LECL5/6 neurons and mPFC neurons co-dependently encode item memory as a map of associated outcome rules.