Episodic memory encompasses flexible processes that enable us to create and update knowledge by making novel inferences across overlapping but distinct events. Here we examined whether an ingroup source enhances the capacity to draw such inferences. In three studies with US-American samples (NStudy1 = 53, NStudy2 = 68, NStudy3 = 68), we investigated the ability to make indirect associations, inferable from overlapping events, presented by ingroup or outgroup sources. Participants were better at making inferences based on events presented by ingroup compared to outgroup sources (Studies 1 and 3). When the sources did not form a team, the effect was not replicated (Study 2). Furthermore, we show that this ingroup advantage may be linked to differing source monitoring resources allocated to ingroup and outgroup sources. Altogether, our findings demonstrate that inferential processes are facilitated for ingroup information, potentially contributing to spreading biased information from ingroup sources into expanding knowledge networks, ultimately maintaining and strengthening polarized beliefs.