Prior knowledge profoundly influences perceptual processing. Previous studies have revealed consistent suppression of predicted stimulus information in sensory areas, but how prior knowledge modulates processing higher up in the cortical hierarchy remains poorly understood. In addition, the mechanism leading to suppression of predicted sensory information remains unclear, and studies thus far have revealed a mixed pattern of results in support of either the ‘sharpening’ or ‘dampening’ model. Here, using 7T fMRI in humans (both sexes), we observed that prior knowledge acquired from fast, one-shot perceptual learning sharpens neural representation throughout the ventral visual stream, generating suppressed sensory responses. In contrast, the frontoparietal (FPN) and default-mode (DMN) networks exhibit similar sharpening of content-specific neural representation but in the context of unchanged and enhanced activity magnitudes, respectively—a pattern we refer to as ‘selective enhancement’. Together, these results reveal a heretofore unknown macroscopic gradient of prior knowledge’s sharpening effect on neural representations across the cortical hierarchy.