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Event-related brain potentials (ERPs) were recorded from 24 young adults during a recognition test including Old, New, and Recombined pairs composed of two words studied in different pairs. Recombined pairs called for a response of 'new'. Task difficulty was increased by repetition of some words during the study phase; a subject might study tower/pie, puppet/pie, drill/wreath and bee/wreath (pairs with a Common word), and at test, encounter the Common Recombined pair of puppet/wreath (in addition to Unique Recombined pairs composed of two words studied once). Individual accuracy in the Recombined conditions varied widely, but was unrelated to general memory ability as indexed by accuracy on the Old and New pairs. Posterior brain potentials showed graded amplitudes dependent on the oldness of both the individual words and their combinations (Old > Recombined > New, and Common > Unique), but were also unrelated to accuracy in the Recombined conditions. Amplitudes of ERPs recorded over prefrontal scalp accounted for a large proportion of the individual variability in differentiating studied combinations of words from recombinations of studied elements. The experimental design differentiates three possible roles of prefrontal cortex in source or associative memory tests: resolving a conflict between familiarity and a response of 'new', extended memory search, and evaluation of ambiguous memory signals.