We investigated the role of emotion on item and source memory using the item method of directed forgetting (DF) paradigm. We predicted that emotion would produce source memory impairment because emotion would make it more difficult to distinguish between to-be-remembered (R items) and to-be-forgotten items (F items) by making memory strength of R and F items similar to each other. Participants were presented with negatively arousing, positively arousing, and neutral pictures. After each picture, they received an instruction to remember or forget the picture. At retrieval, participants were asked to recall both R and F items and indicate whether each item was an R or F item. Recall was higher for the negatively arousing than for the positively arousing or neutral pictures. Further, DF occurred for the positively arousing and neutral pictures, whereas DF was not significant for the negatively arousing pictures. More importantly, the negatively arousing pictures, particularly the ones with violent content, showed a higher tendency of producing misattribution errors than the other picture types, supporting the notion that negative emotion may produce source memory impairment, even though it is still not clear whether the impairment occurs at encoding or retrieval.