Associative inference, the process of drawing novel links between existing knowledge to rapidly integrate associated information, is supported by the hippocampus and neocortex. Within the neocortex, the medial prefrontal cortex (mPFC) has been implicated in the rapid cortical learning of new information that is congruent with an existing framework of knowledge, or schema. How the brain integrates associations to form inferences, specifically how inferences are represented, is not well understood. In this study, we investigate how the brain uses schemas to facilitate memory integration in an associative inference paradigm (A-B-C-D). We conducted two event-related fMRI experiments in which participants retrieved previously learned direct (AB, BC, CD) and inferred (AC, AD) associations between word pairs for items that are schema congruent or incongruent. Additionally, we investigated how two factors known to affect memory, a delay with sleep, and reward, modulate the neural integration of associations within, and between, schema. Schema congruency was found to benefit the integration of associates, but only when retrieval immediately follows learning. RSA revealed that neural patterns of inferred pairs (AC) in the PHc, mPFC, and posHPC were more similar to their constituents (AB and BC) when the items were schema congruent, suggesting that schema facilitates the assimilation of paired items into a single inferred unit containing all associated elements. Furthermore, a delay with sleep, but not reward, impacted the assimilation of inferred pairs. Our findings reveal that the neural representations of overlapping associations are integrated into novel representations through the support of memory schema.