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Upon receiving a correction, initially presented misinformation often continues to influence people's judgment and reasoning. Whereas some researchers believe that this so-called continued influence effect of misinformation (CIEM) simply arises from the insufficient encoding and integration of corrective claims, others assume that it arises from a competition between the correct information and the initial misinformation in memory. To examine these possibilities, we conducted two functional magnetic resonance imaging (fMRI) studies. In each study, participants were asked to (a) read a series of brief news reports that contained confirmations or corrections of prior information and (b) evaluate whether subsequently presented memory probes matched the reports' correct facts rather than the initial misinformation. Both studies revealed that following correction-containing news reports, participants struggled to refute mismatching memory probes, especially when they referred to initial misinformation (as opposed to mismatching probes with novel information). We found little evidence, however, that the encoding of confirmations and corrections produced systematic neural processing differences indicative of distinct encoding strategies. Instead, we discovered that following corrections, participants exhibited increased activity in the left angular gyrus and the bilateral precuneus in response to mismatching memory probes that contained prior misinformation, compared to novel mismatch probes. These findings favour the notion that people's susceptibility to the CIEM arises from the concurrent retention of both correct and incorrect information in memory.