Loneliness describes a negative experience associated with perceived social disconnection. Despite the clear links between loneliness and mental and physical health, relatively little is known about how loneliness affects cognition. In this study, we tested the effect of loneliness on cognitive distance between the self and others, using a task in which participants completed a surprise memory task for adjectives implicitly encoded in relation to the self, a close friend or a celebrity. We assessed item memory sensitivity, metacognitive sensitivity, metacognitive efficiency and source memory for positive and negative words. In addition, participants reported their trait loneliness and depression. Results revealed an overall self-referential advantage compared with both friend and celebrity encoded items. Likewise, a friend-referential advantage was identified compared to celebrity-encoded items. Individuals who experienced more loneliness showed a greater self-referential bias in comparison to words encoded in relation to a close friend, and a smaller friend-referential bias in comparison to words encoded in relation to celebrity. These findings suggest that loneliness is reflected in a greater cognitive distance between the self and close friends in relation to memory biases. The results have important implications for understanding the social contextual effects on memory and the cognitive ramifications of loneliness.