It is often proposed that prefrontal cortex is important in organization and control of working memory contents. In some cases, effective reorganization can decrease task difficulty, implying a dissociation between frontal activity and basic memory demand. In a spatial working memory task, we studied the improvement of performance that occurs when materials can be reorganized into higher level groups or chunks. Structured sequences, encouraging reorganization and chunking, were compared with unstructured sequences. Though structured sequences were easier to remember, event-related functional magnetic resonance imaging (fMRI) showed increased activation of lateral frontal cortex, in particular during memory encoding. The results show that, even when memory demand decreases, organization of working memory contents into higher level chunks is associated with increased prefrontal activity.