Memory researchers have long been captivated by the nature of memory distortions and have made efforts to identify the neural correlates of true and false memories. However, the underlying mechanisms of avoiding false memories by correctly rejecting related lures remains underexplored. In this study, we employed a variant of the Deese/Roediger-McDermott paradigm to explore neural signatures of committing and avoiding false memories. ERP were obtained for True recognition, False recognition, Correct rejection of new items, and, more importantly, Correct rejection of related lures. With these ERP data, early-frontal, left-parietal, and late right-frontal old/new effects (associated with familiarity, recollection, and monitoring processes, respectively) were analysed. Results indicated that there were similar patterns for True and False recognition in all three old/new effects analysed in our study. Also, False recognition and Correct rejection of related lures activities seemed to share common underlying familiarity-based processes. The ERP similarities between False recognition and Correct rejection of related lures disappeared when recollection processes were examined because only False recognition presented a parietal old/new effect. This finding supported the view that actual false recollections underlie false memories, providing evidence consistent with previous behavioural research and with most ERP and neuroimaging studies. Later, with the onset of monitoring processes, False recognition and Correct rejection of related lures waveforms presented, again, clearly dissociated patterns. Specifically, False recognition and True recognition showed more positive going patterns than Correct rejection of related lures signal and Correct rejection of new items signature. Since False recognition and Correct rejection of related lures triggered familiarity-recognition processes, our results suggest that deciding which items are studied is based more on recollection processes, which are later supported by monitoring processes. Results are discussed in terms of Activation-Monitoring Framework and Fuzzy Trace-Theory, the most prominent explanatory theories of false memory raised with the Deese/Roediger-McDermott paradigm.