Despite considerable interest in understanding how stress influences memory accuracy and errors, particularly in children, methodological limitations have made it difficult to examine the effects of stress independent of the effects of the emotional valence of to-be-remembered information in developmental populations. In this study, we manipulated stress levels in 7-8- and 12-14-year-olds and then exposed them to negative, neutral, and positive word lists. Shortly afterward, we tested their recognition memory for the words and false memory for non-presented but related words. Adolescents in the high-stress condition were more accurate than those in the low-stress condition, while children’s accuracy did not differ across stress conditions. Also, among adolescents, accuracy and errors were higher for the negative than positive words, while in children, word valence was unrelated to accuracy. Finally, increases in children’s and adolescents’ cortisol responses, especially in the high-stress condition, were related to greater accuracy but not false memories and only for positive emotional words. Findings suggest that stress at encoding, as well as the emotional content of to-be-remembered information, may influence memory in different ways across development, highlighting the need for greater complexity in existing models of true and false memory formation.