This study investigated the effect of encoding context on the formation of false memories, using Category Associates Procedure with pictorial stimuli. In the literature, distinctiveness is suggested to decrease false memories; however, the mechanisms of this effect are still of debate. Participants studied objects from several categories, each category list either presented on congruent or incongruent backgrounds. Later, they performed a recognition test for three item types: studied, critical lure and unrelated items. We expected that incongruent condition should require more distinctive encoding, which may lead to decreased false recognition of critical lures compared to congruent condition. The results revealed a false memory effect consistent with existing literature; however, there was no difference between congruent and incongruent conditions in terms of false memory rates. The results were discussed in the light of encoding-based and retrieval-based theories. Additionally, visual imagery measures and reported strategies were also considered.