People with schizophrenia who hallucinate show impairments in reality monitoring (the ability to distinguish internally generated information from information obtained from external sources) compared to non-hallucinating patients and healthy individuals. While this may be explained at least in part by an increased externalizing bias, it remains unclear whether this impairment is specific to reality monitoring, or whether it also reflects a general deficit in the monitoring of self-generated information (internal source monitoring). Much interest has focused recently on continuum models of psychosis which argue that hallucination-proneness is distributed in clinical and non-clinical groups, but few studies have directly investigated reality monitoring and internal source monitoring abilities in healthy individuals with a proneness to hallucinations. Two experiments are presented here: the first (N = 47, with participants selected for hallucination-proneness from a larger sample of 677 adults) found no evidence of an impairment or externalizing bias on a reality monitoring task in hallucination-prone individuals; the second (N = 124) found no evidence of atypical performance on an internal source monitoring task in hallucination-prone individuals. The significance of these findings is reviewed in light of the clinical evidence and the implications for models of hallucination generation discussed.