Mood affects both memory accuracy and memory distortions. However, some aspects of this relation are still poorly understood: (1) whether valence and arousal equally affect false memory production, and (2) whether retrieval-related processes matter; the extant literature typically shows that mood influences memory performance when it is induced before encoding, leaving unsolved whether mood induced before retrieval also impacts memory. We examined how negative, positive, and neutral mood induced before retrieval affected inferential false memories and related subjective memory experiences. A recognition-memory paradigm for photographs depicting script-like events was employed. Results showed that individuals in both negative and positive moods-similar in arousal levels-correctly recognized more target events and endorsed fewer false memories (and these errors were linked to remember responses less frequently), compared to individuals in neutral mood. This suggests that arousal (but not valence) predicted memory performance; furthermore, we found that arousal ratings provided by participants were more adequate predictors of memory performance than their actual belonging to either positive, negative or neutral mood groups. These findings suggest that arousal has a primary role in affecting memory, and that mood exerts its power on true and false memory even when induced at retrieval.