Recognition memory judgments can be influenced by a variety of signals including fluency. Here, we investigated whether the neural correlates of memory illusions (i.e., misattribution of fluency to prior study) can be modulated by fluency context. Using a masked priming/recognition memory paradigm, we found memory illusions for low confidence decisions. When fluency varied randomly across trials, we found reductions in perirhinal cortex (PrC) activity for primed trials, as well as a (pre)cuneus-PrC (BA 35) connectivity. When the fluency context was unchanging, there was increased PrC activity for primed trials, with the (pre)cuneus showing greater connectivity with PrC (BA 36). Thus, our results tentatively suggest two neural mechanisms via which fluency can lead to memory illusions.