The present study investigated the effects of mind wandering (task-unrelated thought) on the subcomponents of episodic memory as reflected by event-related potentials (ERPs). Specifically, individual differences in the pattern of ERP episodic ‘old/new’ effects (left-parietal, right-frontal and central-negativity effects) were examined across groups of participants experiencing either high or low frequencies of task-unrelated thought during encoding. Twenty participants studied lists of words and line drawings in one of two contexts (red versus green coloured boxes). At test, participants discriminated between target (old words or line drawings presented in one colour) and nontargets (old items from the other colour and new items). On completion of the memory task, participants completed the ‘thinking’ component of the Dundee Stress State Questionnaire to provide a retrospective measure of task-unrelated thought. Behavioural data indicated that irrespective of the presence of task-unrelated thought, participants were able to complete the memory task equally well. However, an analysis of ERPs across High and Low task-unrelated thought groups revealed differences in retrieval strategy. Those individuals with infrequent episodes of task-unrelated thought at study used a ‘pure’ recollection strategy (left-parietal effect only). Conversely, those participants experiencing frequent episodes of task-unrelated thought were unable to recollect the stimuli with ease, as indexed by a diminished parietal effect. As a consequence, these participants employed additional strategic processes for task completion, as indexed by an elevated amplitude of central negativity effects. These data are consistent with the decoupling hypothesis of mind wandering which suggests impaired recollection when attention becomes directed away from the task.