People often recognize and remember faces of individuals within their own race more easily than those of other races. While behavioral research has long suggested that the Other-Race Effect (ORE) is due to extensive experience with one's own race group, the neural mechanisms underlying the effect have remained elusive. Predominant theories of the ORE have argued that the effect is mainly caused by processing disparities between same and other-race faces during early stages of perceptual encoding. Our findings support an alternative view that the ORE is additionally shaped by mnemonic processing mechanisms beyond perception and attention. Using a "pattern separation" paradigm based on computational models of episodic memory, we report evidence that the ORE may be driven by differences in successful memory discrimination across races as a function of degree of interference or overlap between face stimuli. In contrast, there were no ORE-related differences on a comparable match-to-sample task with no long-term memory load, suggesting that the effect is not simply attributable to visual and attentional processes. These findings suggest that the ORE may emerge in part due to "tuned" memory mechanisms that may enhance same-race, at the expense of other-race face detection.