Episodic memory involves flexible retrieval processes that allow us to link together distinct episodes, make novel inferences across overlapping events, and recombine elements of past experiences when imagining future events. However, the same flexible retrieval and recombination processes that underpin these adaptive functions may also leave memory prone to error or distortion, such as source misattributions in which details of one event are mistakenly attributed to another related event. To determine whether the same recombination-related retrieval mechanism supports both successful inference and source memory errors, we developed a modified version of an associative inference paradigm in which participants encoded everyday scenes comprised of people, objects, and other contextual details. These scenes contained overlapping elements (AB, BC) that could later be linked to support novel inferential retrieval regarding elements that had not appeared together previously (AC). Our critical experimental manipulation concerned whether contextual details were probed before or after the associative inference test, thereby allowing us to assess whether (a) false memories increased for successful versus unsuccessful inferences, and (b) any such effects were specific to after compared with before participants received the inference test. In each of 4 experiments that used variants of this paradigm, participants were more susceptible to false memories for contextual details after successful than unsuccessful inferential retrieval, but only when contextual details were probed after the associative inference test. These results suggest that the retrieval-mediated recombination mechanism that underlies associative inference also contributes to source misattributions that result from combining elements of distinct episodes.