Through the process of "reconsolidation," reminders can temporarily destabilize memories and render them vulnerable to change. Recent rodent research has proposed that prediction error, or the element of surprise, is a key component of this process; yet, this hypothesis has never before been extended to complex episodic memories in humans. In our novel paradigm, we used naturalistic stimuli to demonstrate that prediction error enables adaptive updating of episodic memories. In Study 1, participants (N = 48) viewed 18 videos, each depicting an action-outcome event. The next day, we reactivated these memories by presenting the videos again. We found that incomplete reminders, which interrupted videos before the outcome, made memories vulnerable to subsequent interference from a new set of videos, producing false memories. In Study 2 (N = 408), an independent sample rated qualities of the stimuli. We found that videos that were more surprising when interrupted produced more false memories. Last, in Study 3 (N = 24), we tested competing predictions of reconsolidation theory and the Temporal Context Model, an alternative account of source confusion. Consistent with the mechanistic time-course of reconsolidation, our effects were crucially time-dependent. Overall, we synthesize prior animal and human research to present compelling evidence that prediction error destabilizes episodic memories and drives dynamic updating in the face of new information.