Confabulation is a newly described abnormality in schizophrenia, but its mechanisms are as yet unclear. Here we describe a detailed investigation of three cases who were previously identified as confabulators. The patients were administered experimental tasks as well as standard neuropsychological tests of memory and executive function in an attempt to elucidate the possible mechanisms. It was found that the severity of cognitive impairment reflects the severity of confabulation, but that memory impairment is neither necessary nor sufficient to account for confabulation. This suggests that confabulation and memory have different substrates. Within the spectrum of executive deficits, impairments in response suppression and response monitoring, but not planning or generation, were consistently associated with confabulation. It is suggested that the stages of this form of confabulation are unlike those previously reported in other patients since faults occur at both input and output. At the input stage, narrative material is encoded in a disorganized manner, while at the output stage this disorganization is compounded by faulty editing processes. This observation highlights the importance of the interaction between encoding and retrieval in schizophrenia confabulation. Impaired plausibility judgements and confabulation are more likely to occur with complex material which requires organization at the input stage.