Memory distortions and illusions have been thoroughly documented in psychological studies, but little is known about the neuroanatomical correlates of true and false memories. Vivid but illusory memories can be induced by asking people whether they recall or recognize words that were not previously presented, but are semantically related to other previously presented words. We used positron emission tomography to compare brain regions involved in veridical recognition of printed words that were heard several minutes earlier and illusory recognition of printed words that had not been heard earlier. Veridical and illusory recognition were each associated with blood flow increases in a left medial temporal region previously implicated in episodic memory; veridical recognition was distinguished by additional blood flow increases in a left temporoparietal region previously implicated in the retention of auditory/phonological information. This study reveals similarities and differences in the way the brain processes accurate and illusory memories.