Like many other types of memory formation, novel word learning benefits from an offline consolidation period after the initial encoding phase. A previous EEG study has shown that retrieval of novel words elicited more word-like-induced electrophysiological brain activity in the theta band after consolidation [Bakker, I., Takashima, A., van Hell, J. G., Janzen, G., & McQueen, J. M. Changes in theta and beta oscillations as signatures of novel word consolidation. Journal of Cognitive Neuroscience, 27, 1286–1297, 2015]. This suggests that theta-band oscillations play a role in lexicalization, but it has not been demonstrated that this effect is directly caused by the formation of lexical representations. This study used magnetoencephalography to localize the theta consolidation effect to the left posterior middle temporal gyrus (pMTG), a region known to be involved in lexical storage. Both untrained novel words and words learned immediately before test elicited lower theta power during retrieval than existing words in this region. After a 24-hr consolidation period, the difference between novel and existing words decreased significantly, most strongly in the left pMTG. The magnitude of the decrease after consolidation correlated with an increase in behavioral competition effects between novel words and existing words with similar spelling, reflecting functional integration into the mental lexicon. These results thus provide new evidence that consolidation aids the development of lexical representations mediated by the left pMTG. Theta synchronization may enable lexical access by facilitating the simultaneous activation of distributed semantic, phonological, and orthographic representations that are bound together in the pMTG.