Nondeclarative memory and novelty processing in the brain is an actively studied field of neuroscience, and reducing neural activity with repetition of a stimulus (repetition suppression) is a commonly observed phenomenon. Recent findings of an opposite trend—specifically, rising activity for unfamiliar stimuli—question the generality of repetition suppression and stir debate over the underlying neural mechanisms. This letter introduces a theory and computational model that extend existing theories and suggests that both trends are, in principle, the rising and falling parts of an inverted U-shaped dependence of activity with respect to stimulus novelty that may naturally emerge in a neural network with Hebbian learning and lateral inhibition. We further demonstrate that the proposed model is sufficient for the simulation of dissociable forms of repetition priming using real-world stimuli. The results of our simulation also suggest that the novelty of stimuli used in neuroscientific research must be assessed in a particularly cautious way. The potential importance of the inverted-U in stimulus processing and its relationship to the acquisition of knowledge and competencies in humans is also discussed.