This study expanded the inference and story recognition literature by investigating differences within the older age range, differences as a result of cognitive impairment, no dementia (CIND), and applying signal detection procedures to the analysis of accuracy data. Old-old adults and those with more severe CIND showed poorer ability to accurately recognize inferences, and less sensitivity in discriminating between statement types. Results support the proposal that participants used two different recognition strategies. Old-old and CIND adults may be less able to recognize that something plausible with an event may not have actually occurred.