While major depressive disorder has been associated with increased veridical memory for negative information, prior false memory literature has linked high depressive symptoms to increased false memory for negative information. We tested whether these contradictory findings may be due to semantic and emotional cohesion inflating false alarm rates in the most commonly used false memory paradigm – the Deese-Roediger-McDermott (DRM). In Experiment 1, healthy controls and depressive participants completed two emotional false memory tasks: the DRM, using semantically associated words, and an adaptation using orthographically associated words. Participants encoded words associated with neutral or negative critical lures. During subsequent recognition memory testing, errors were greater for negative than neutral semantic critical lures, but the opposite pattern was observed for orthographic critical lures. These findings support that orthographically associated stimuli provide a non-confounded method to test emotional false memory. In Experiment 2, we deployed the orthographic paradigm with simultaneous electroencephalography (EEG) and a state measure of negative mood (Positive and Negative Affective Scale) to better understand neurocognitive components of emotional false memory. Replicating Experiment 1, we found fewer false alarms for negative than neutral novel orthographically associated words. The EEG data showed significant differences in two memory-related event-related potentials: the familiarity-related N400, and the recollection-related late positive component (LPC). N400 amplitudes were larger for true versus false endorsements. For LPC, increasing depressive symptoms predicted greater amplitude differences for true versus false negative items and reduced differences for neutral items. However, increasingly negative mood predicted reduced amplitude differences for negative items, and greater amplitude differences for neutral items. Although depressive symptoms and negative mood state are highly correlated, they may inform differentially influence shifts in memory retrieval strategies, with depressive symptoms predicting reduced false alarms for negative information, and negative mood state predicting increased recollection errors for negative information.