In the present study, items pre-exposed in a familiarization series were included in a list discrimination task to manipulate memory strength. At test, participants were required to discriminate strong targets and strong lures from weak targets and new lures. This resulted in a concordant pattern of increased "old" responses to strong targets and lures. Model estimates attributed this pattern to either equivalent increases in memory strength across the two types of items (unequal variance signal detection model) or equivalent increases in both familiarity and recollection (dual process signal detection [DPSD] model). Hippocampal activity associated with strong targets and lures showed equivalent increases compared with missed items. This remained the case when analyses were restricted to high-confidence responses considered by the DPSD model to reflect predominantly recollection. A similar pattern of activity was observed in parahippocampal cortex for high-confidence responses. The present results are incompatible with "noncriterial" or "false" recollection being reflected solely in inflated DPSD familiarity estimates and support a positive correlation between hippocampal activity and memory strength irrespective of the accuracy of list discrimination, consistent with the unequal variance signal detection model account.