Children's perceptions of gender are greatly influenced by the illustrations/text they encounter in picture books. While transacting with authentic literature, children build gender schema that guide processing of subsequent information. This knowledge can bias memory to a point where children misremember or distort information to make it fit their existing schema. Elementary school children were presented two Caldecott Award-winning picture books and asked to retell the stories and answer criterion-specific questions related to genderoconsistent/inconsistent information contained in each story. Responses were qualitatively examined and revealed patterns of spurious recall. Children tended to misremember or distort gender-inconsistent story information. Story retellings included wrongful stereotyped interpretation of main character(s) behaviors and emotions. Follow-up interview questions revealed rationales for any misremembrance and generated responses consistent with gender bias. The influence of stereotypes and implications for teachers are discussed. (Contains 3 tables and 4 figures.)