Face recognition is an important component of successful social interactions in humans. A large literature in social psychology has focused on the phenomenon termed the "other race" (ORE) effect, the tendency to be more proficient with face recognition within one's own ethnic group compared with other ethnic groups. Several potential hypotheses have been proposed for this effect, including perceptual expertise, social grouping, and holistic face processing. Recent work on mnemonic discrimination (i.e., the ability to resolve mnemonic interference among similar experiences) may provide a mechanistic account for the ORE. In the current study, we examined how discrimination and generalization in the presence of mnemonic interference may contribute to the ORE. We developed a database of computerized faces divided evenly among ethnic origins (Black, Caucasian, East Asian, South Asian), as well as morphed face stimuli that varied in the amount of similarity to the original stimuli (30%, 40%, 50%, and 60% morphs). Participants first examined the original unmorphed stimuli during study, then during test were asked to judge the prior occurrence of repetitions (targets), morphed stimuli (lures), and new stimuli (foils). We examined participants' ability to correctly reject similar morphed lures and found that it increased linearly as a function of face dissimilarity. We additionally found that Caucasian participants' mnemonic discrimination-generalization functions were sharply tuned for Caucasian faces but considerably less tuned for East Asian and Black faces. These results suggest that expertise plays an important role in resolving mnemonic interference, which may offer a mechanistic account for the ORE.