Our daily experiences unfold continuously, but we remember them as a series of discrete events through a process called event segmentation. Prominent theories of event segmentation suggest that event boundaries in memory are triggered by significant shifts in the external environment, such as a change in one’s physical surroundings. In this review, we argue for a fundamental extension of this research field to also encompass internal state changes as playing a key role in structuring event memory. Accordingly, we propose an expanded taxonomy of event boundary-triggering processes, and review behavioral and neuroscience research on internal state changes in three core domains: affective states, goal states, and motivational states. Finally, we evaluate how well current theoretical frameworks can accommodate the unique and interactive contributions of internal states to event memory. We conclude that a theoretical perspective on event memory that integrates both external environment and internal state changes allows for a more complete understanding of how the brain structures experiences, with important implications for future research in cognitive and clinical neuroscience.