Two competing hypotheses attempt to explain the effects of emotional content on the production of false memory. The conceptual relatedness account posits that negative emotion increases false memory by strengthening familiarity process, whereas the distinctiveness heuristic account postulates that negative emotion reduces false memory by influencing recollection process. Here, using the categorized pictures paradigm, we examined these hypotheses by investigating emotional influences on false recognition memory performance and the event-related potential (ERP) correlates of familiarity and recollection. Participants were presented with positive, neutral, or negative pictures from various categories during encoding and later completed a recognition test while electroencephalogram data were recorded. Behavioral results revealed lower corrected false recognition rates for negative and neutral pictures than for positive ones, with no significant difference between negative and neutral pictures. In addition, negative pictures were associated with a more conservative response bias in comparison with neutral and positive pictures. Importantly, ERP results revealed enhanced recollection related parietal old/new effects for negative pictures relative to positive and neutral pictures, but comparable familiarity-related early frontal old/new effects across each type of emotional valence category during both true and false recognition. Our results suggest that emotionally negative content may affect production of false memory mainly by engaging a distinctiveness heuristic. Methodological implications of these findings are discussed.