Class stereotypes are simplistic generalizations about attributes, differences of the social class, and about roles of individuals and/or groups. Stereotypes provide perceives a basis to generate inferences about unseen or unobserved aspects of a stereotypic schema, enabling them to make conjectures beyond the information given. Multinomial Processing Tree Models (MPT) are theories about the decision processes that were involved in source monitoring and can provide separate parameters for source discrimination, item detection, and response biases. It has been suggested by stereotype studies in a framework of source monitoring that stereotypes provided after encoding and before test, might produce a response bias in favor of the stereotype. This bias can distort memory representations of earlier events, resulting in false memories. Previous studies suggested that participants may resort to guess based on their stereotypes knowledge in situations when they cannot remember the source in a source-monitoring task (Bayen, Nakamura, Dupuis, & Yang, 2000). According to this guessing hypothesis, if stereotypes are activated during retrieval in an explicit way, participants are prone to consciously make use of stereotypes knowledge and to guess the source in a stereotype consistent manner, particularly when they fail to remember the actual source. However, recent research has provided mixed evidence. By controlling the guessing, other researchers still found that participants create illusory recollections when stereotypes are activated during retrieval in an explicit way (Dodson, Darragh, & Williams, 2008). So an intriguing question is: If guessing plays a critical role in creating false memories, what other factors should be responsible for false memories after controlling guessing? In this study, MPT were used for the measurement of cognitive processes in two source monitoring experiments. Sixty-six college students of normal vision, twenty-six in Experiment 1 and forty in Experiment 2, were enrolled to participate. The purpose of Experiment 1 was to determine how stereotypes influence source-monitoring decision processes when the class stereotypes are subliminally primed during retrieval. The results showed that when the subliminally primed class stereotype is provided during retrieval, participants’ memory performance was distorted in a stereotype consistent manner, presumably through guessing responses. Particularly, the automatically activated class stereotypes affect source guessing process, thus producing false memories. In Experiment 2, explicit warning was provided to reduce false memory. We aimed to investigate how stereotypes influence decision processes of source monitoring, when the class stereotypes are explicitly primed during retrieval. Our results demonstrated that participants showed similar stereotype-induced false memories even after the stereotypes guessing at conscious level was controlled. Although it was difficult to fully control the stereotypes guessing at unconscious level, the explicit warning could lower the rate of false recall. Thus, the unconscious stereotypes guessing and illusory recollections might be the basis for false memories in a stereotype consistent manner. To sum up, the present study indicated that class stereotypes can affect source memory under different conditions in a flexible way. The activation of class stereotypes, in a source monitoring framework, affects not only guessing processes but also illusory recollections, both of which provide a potential basis for erroneous source attributions.