A major task of episodic memory is to create unique, distinguishable representations of highly overlapping perceptual inputs. Several studies on this basic function have shown that it is based on the intact functioning of certain subregions of the hippocampus and is among the most sensitive behavioral indicators of mild cognitive impairment (MCI) and dementia. Here we assessed pupil dilation associated with performance in a widely used recognition paradigm that aims to uncover the intactness of fine-graded mnemonic discrimination. A sample of healthy undergraduate students was used. First, we showed that the correct discrimination between highly similar lure items and target items elicit larger pupil response than correct target identification. Second, we found that mnemonic discrimination is associated with larger pupil response in general as compared to target identification, regardless of whether the response was correct or not. These results suggest the pupil changes differentiate mnemonic discrimination and memory identification processes in recognition performance.