Anxiety disorders are characterized by difficulty distinguishing safe contexts from previous or imagined threats. Conditioned fears spread beyond what is reasonable or adaptive, leading to broad and interfering anxieties when people overgeneralize their fears. Difficulties with mnemonic discrimination, a component process of memory supporting the integration of old and new experiences, may foster overgeneralization and increase risk for anxiety disorders. Individuals along a spectrum of anxiety severity (n = 117) completed a differential fear conditioning paradigm and the computerized Mnemonic Similarity Task. The task measures mnemonic discrimination by requiring individuals to differentiate between highly similar old and new entities. We predicted that low mnemonic discrimination would be associated with overgeneralization, i.e., flatter slopes of change in response to stimuli increasingly dissimilar to the conditioned stimulus. Conditional growth models showed that as expected, participants with the highest mnemonic discrimination scores also exhibited the steepest declines in fear ratings as stimuli increasingly differed from the conditioned stimulus. Results were unchanged after adjusting for recognition memory, self-reported anxiety, and clinical diagnoses and symptoms. Results support the hypothesis that memory interference (i.e., low mnemonic discrimination) could increase vulnerability for overgeneralization. Findings justify additional exploration of mnemonic discrimination and its role in anxious psychopathology.