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Description: Schemas are knowledge structures that allow us to make efficient judgments about the world without the cost of memorizing every detail of previous experiences. It has long been known that schemas can enhance long-term memory for related information. The usefulness of schemas, however, critically depends on their adaptability: how flexibly a schema can be updated according to changing environmental conditions. Prior consolidation of a schema supports new learning of schema-consistent information. Yet, the effect of consolidation on inconsistent information, and how schemas may be subsequently updated, are not well understood. It is difficult to track the dynamic updating of knowledge structures with traditional memory measures. Here, using a continuous-report paradigm, we were able to show that schematization increases incrementally with consolidation and that the strength with which schemas are initially established predicts schema-guided responding in a later test. Critically, schema updating in response to inconsistent information was more pronounced in a group which was given time to consolidate compared to a group that was not given time to consolidate. Importantly, the later group reverted back to the no longer relevant schema, indicating that systematic bias towards old information, rather than increased forgetting underlies decreased memory for schema-inconsistent information.