Accuracy of memory is critical in legal and clinical contexts. These contexts are often linked with high levels of emotional distress and social sources that can provide potentially distorting information about stressful events. This study investigated how distress was associated with susceptibility to misinformation about a trauma analogue event. We employed an experimental design whereby in Phase 1, participants (N = 243, aged 20–72, 122 females, 117 males, 4 gender diverse) watched a trauma film (car crash) and heard an audio summary that contained misinformation (misled items), true reminders (consistent items), and no reminders (control items) about the film. Participants rated their total distress, and symptoms of avoidance, intrusions, and hyperarousal, in response to the film. They then completed cued recall, recognition, and source memory tasks. One week later in Phase 2, participants (N = 199) completed the same measures again. Generalised linear mixed models were used. A significant misinformation effect was found, and importantly, participants with higher distress levels showed a smaller misinformation effect, owing to especially poor memory for consistent items compared to their less distressed counterparts. Distress was also associated with improved source memory for misled items. Avoidance of the film’s reminders was associated with a smaller misinformation effect during immediate retrieval and a larger misinformation effect during delayed retrieval. Findings suggest that distress is associated with decreased susceptibility to misinformation in some cases, but also associated with poorer memory accuracy in general. Limitations are discussed, and the need for further research is highlighted.