The Medio-Dorsal Nuclei (MDN) including the thalamic magnocellular and parvocellular thalamic regions has been implicated in verbal memory function. In a 77 year old lady, with a prior history of a clinically silent infarct of the left MDN, we observed the acute onset of spontaneous confabulations when an isolated new infarct occurred in the right MDN. The patient and five age-matched healthy subjects underwent Magnetic Resonance Imaging (MRI) and Diffusion Tensor Imaging (DTI). The thalamic lesions were localized by overlapping Morel Thalamic Atlas with structural MRI data. DTI was used to assess: i) white matter alterations (Fractional Anisotropy, FA) within fibers connecting the ischemic areas to cortex; ii) the micro-structural damage (Mean Diffusivity) within the thalamic sub-regions defined by their structural connectivity to the Anterior Cingulate Cortex (ACC) and to the temporal lobes. These target regions were chosen because their damage is considered associated with the appearance of confabulations. Thalamic lesions were localized within the parvocellular regions of the right and left MDNs. The structural connectivity study showed that the fiber tracts, connecting the bilaterally damaged thalamic regions with the frontal cortex, corresponded to the anterior thalamic radiations (ATR). FA within these tracts was significantly lower in the patient as compared to controls. Mean diffusivity within the MDNs projecting to Broadman area (BA) 24, BA25 and BA32 of ACC was significantly higher in the patient than in control group. Mean diffusivity values within the MDN projecting to temporal lobes in contrast were not different between patient and controls. Our findings suggest the involvement of bilateral MDNs projections to ACC in the genesis of confabulations and help provide clarity to the longstanding debate on the origin of confabulations.