Reality monitoring refers to processes involved in distinguishing internally generated information from information presented in the external world, an activity thought to be based, in part, on assessment of activated features such as the amount and type of cognitive operations and perceptual content. Impairment in reality monitoring has been implicated in symptoms of mental illness and associated more widely with the occurrence of anomalous perceptions as well as false memories and beliefs. In the present experiment, the cognitive mechanisms of reality monitoring were probed in healthy individuals using a task that investigated the effects of stimulus modality (auditory vs visual) and the type of action undertaken during encoding (thought us speech) on subsequent source memory. There was reduced source accuracy for auditory stimuli compared with visual, and when encoding was accompanied by thought as opposed to speech, and a greater rate of externalization than internalization errors that was stable across factors. Interpreted within the source monitoring framework (Johnson, Hashtroudi, & Lindsay, 1993), the results are consistent with the greater prevalence of clinically observed auditory than visual reality discrimination failures. The significance of these findings is discussed in light of theories of hallucinations, delusions and confabulation. (C) 2016 The Author(s). Published by Elsevier Ltd. This is an open access article under the CC BY license