We induced people to experience a false-memory illusion by first asking them to visualize common objects when cued with the corresponding word; on some trials, a photograph of the object was presented 1800 ms after the cue word. We then tested their memory for the photographs. Posterior brain potentials in response to words at encoding were more positive if the corresponding object was later falsely remembered as a photograph. Similar brain potentials during the memory test were more positive for true than for false memories. These results implicate visual imagery in the generation of false memories and provide neural correlates of processing differences between true and false memories.