Memory reactivation appears to be a fundamental process in memory consolidation. In this study we tested the influence of memory reactivation during rapid eye movement (REM) sleep on memory performance and brain responses at retrieval in healthy human participants. Fifty-six healthy subjects (28 women and 28 men, age mean ± standard deviation: 21.6 ± 2.2 y) participated in this functional magnetic resonance imaging (fMRI) study. Auditory cues were associated with pictures of faces during their encoding. These memory cues delivered during REM sleep enhanced subsequent accurate recollections but also false recognitions. These results suggest that reactivated memories interacted with semantically related representations, and induced new creative associations, which subsequently reduced the distinction between new and previously encoded exemplars. Cues had no effect if presented during stage 2 sleep, or if they were not associated with faces during encoding. Functional magnetic resonance imaging revealed that following exposure to conditioned cues during REM sleep, responses to faces during retrieval were enhanced both in a visual area and in a cortical region of multisensory (auditory-visual) convergence. These results show that reactivating memories during REM sleep enhances cortical responses during retrieval, suggesting the integration of recent memories within cortical circuits, favoring the generalization and schematization of the information.