Interfering with stimulus identification can enhance later explicit memory performance. This counterintuitive (and theoretically unexpected) phenomenon was investigated in 5 experiments. Perceptual interference enhanced category-cued recall (a conceptually driven explicit test) but had no effect on a comparable implicit memory test, category-exemplar production. This dissociation was obtained across higher levels of priming and with high-frequency as well as low-frequency exemplars. Furthermore, although perceptual interference enhanced old-new recognition memory, it did not enhance rhyme recognition (a data-driven explicit test) or source discriminability. Explanations based on enhanced semantic elaboration or enhanced encoding of spatio-temporal context do not account for the perceptual-interference effect. An account based on compensatory processing of higher level perceptual representations remains viable and is discussed in terms of the transfer-appropriate processing framework and the item-specific-relational distinction.