Recent studies have repeatedly demonstrated a false memory phenomenon in which people falsely remember having performed an action by oneself when in fact they have only observed the action by another person. We investigated the attentional effect to the action itself on the observation inflation. Fifty-four participants first performed and read actions (Phase 1); then, they observed the action video that showed another’s actions (Phase 2), some of which they had not performed in Phase 1. In the Phase 2, they were required to focus on either the actor’s performance (i.e., attentive observation condition) or irrelevant objects, which were presented in the background (i.e., inattentive observation condition) to modulate their attention. Around 2 weeks later, participants took a surprise source-memory test (Phase 3). In this phase, we asked them to judge whether they “performed,” “read,” or “not presented” the action in Phase 1. Three participants were removed from analysis, because they could not attend Phase 3 within 10–16 days after completion of the second phase. We found observation inflation only in the attentive condition, which contradicted the notions from other false memory studies that showed that attention to the target stimuli reduced false memory in general. We discussed the observation inflation mechanism from the perspective of the “like me” system, including the mirror neuron system, self-ownership, and self-agency.