Temporally structured sequences of experiences, such as narratives or life events, are segmented in memory into discrete situational models. In segmentation, contextual shifts are processed as situational boundaries that temporally cluster items according to the perceived contexts. As such, segmentation enhances associative binding of items within a situational model. One side effect of enhanced associative processing is increased risk of false recollections for not-presented, semantically related items. If so, do boundaries facilitate false recollections, or does segmentation protect against them? In two experiments, we introduced situational shifts in word sequences in the form of semantic and perceptual boundaries, with semantic relatedness between words or the frame color around a word changing on a regular basis. After encoding, we tested participants’ associative memory performance and false recollection rates. In Experiment 1, color boundaries occurred synchronously or asynchronously to semantic boundaries. We found better associative recognition, but also more false recollections, for synchronous than asynchronous boundaries. In Experiment 2, color boundaries occurred synchronous to semantic boundaries or were absent entirely. We found that false recollection rates elicited by semantic boundaries increased when color boundaries were absent. We also tested associative memory performance using a non-semantic, temporal memory task. We found better temporal memory performance for semantic boundaries, as well as a negative correlation between increased false recollection rates and better temporal memory performance for semantic lists, but not for random lists. We discuss implications for false memory theories and segmentation of narrative materials in false memory research.