Introduction: the source monitoring account has been widely investigated for hallucinations in schizophrenia. According to this account, hallucinations are inner events that are misattributed to another source. Our paper investigated this account for Alzheimer’s disease. Method: we investigated hallucination experiences in participants with Alzheimer’s disease and age-matched healthy controls, as well as their source monitoring ability. The assessment of source monitoring included three conditions. In the first condition, participants had to remember whether objects were previously manipulated by themselves or by the experimenter (i.e. reality monitoring). In the second condition, they had to remember whether objects were previously manipulated by a black or white experimenter-gloved hand (i.e. external monitoring). In the third condition, participants had to remember whether they had previously manipulated objects or had imagined having done so (i.e. internal monitoring). Results: relative to healthy control participants, participants with Alzheimer’s disease experienced hallucinations more often and lower hits on source monitoring. Interestingly, significant correlations were only observed between hallucinations and the internal monitoring condition in participants with Alzheimer’s disease. Discussion: hallucinations in Alzheimer’s disease seem to be related to the processes of making judgments about the (internal) context in which an event has occurred.