Mood-congruent memory bias is a critical characteristic of depression, but the underlying neural mechanism is largely unknown. Negative memory schemas might enhance encoding and consolidation of negative experiences, thereby contributing to the genesis and perpetuation of depressive pathology. To investigate this relationship, we aimed to perturb medial prefrontal cortex (mPFC) processing, using neuronavigated transcranial magnetic stimulation (TMS) targeting the mPFC. Forty healthy volunteers first underwent a negative mood induction to activate negative schema processing after which they received either active inhibitory (N = 20) or control (N = 20) stimulation to the mPFC. Then, all participants performed the encoding of an emotional false memory task. Recall and recognition performance was tested the following morning. Polysomnographic data were recorded continuously during the night before and after encoding. We observed a significantly lower false recognition of negative critical lures following mPFC inhibition, but no differences in veridical memory. These findings were supported by reaction time data, showing a relative slower response to negative compared with positive critical lures. The current findings support previous causal evidence for a role of the mPFC in schema memory processing and further suggest a role of the mPFC in memory bias.