Human behavior strongly relies on the visual storage of events. Unfortunately, the sense of sight is susceptible to numerous distortions and misidentifications. Our study investigated the possibility of applying neuroimaging methods for verification of eyewitness reports. We developed a film paradigm and investigated three related picture sets in a recognition task using functional magnetic resonance imaging (fMRI). For each picture subjects were instructed to make a known–unknown decision. Behavioral results showed false recognitions for nearly half of the presented stimuli. The fMRI results revealed distinct activations for correct and false recognitions. The orbitofrontal cortex could be distinguished as a key region for processing imagined and distorted information resulting in correct rejection of unknown material. Otherwise, false recognitions of unknown material highlighted surprising activation within the posterior cingulate gyrus indicating the subjects’ strain to match unknown information to that known. The results are discussed in terms of current false memory research.