Introduction: Research with patients with schizophrenia suggests that inhibitory dysfunction leads to the emergence of redundant or irrelevant information from long-term memory into awareness, and that this process may be involved in generating hallucinations. We investigated whether inhibitory dysfunction in Alzheimer’s disease (AD) leads to hallucinations. Method: AD participants and healthy matched controls were assessed with a hallucinations scale and a directed forgetting task. On the directed forgetting task, they were asked to retain a list of 10 words (i.e., List 1). Thereafter, half of the participants were asked to forget this list whereas the other half were asked to retain the list in memory. After the List 1 presentation, all participants were asked to retain another list of 10 words and, successively, were asked to remember all of the words from both lists, regardless of the previous forget or remember instruction. Results: Relative to healthy matched controls, AD participants showed difficulties in suppressing the words from List 1. AD participants also showed more hallucinatory experiences than healthy matched controls. Interestingly, a significant correlation was observed between the score on the hallucinations measure and difficulties in suppressing List 1 in AD participants. Discussion: Hallucinations in AD may, at least in part, be related to difficulties in suppressing memory representations, such that unwanted or repetitive thoughts intrude into consciousness.