Subjective memory complaints (SMCs) are part of the diagnostic criteria for Mild Cognitive Impairment (MCI), yet little is known about their etiology. In some previous studies, no direct relation has been found between SMCs and objective memory performance, yet significant correlations have been identified between SMCs and psychological factors such as depression and anxiety. In the current study, we examined whether negative affect moderated the relation between objective memory functioning and SMCs in a sample of healthy, non-demented participants aged 65 and older. As predicted, several negative affect measures moderated the relationship between objective cognitive functioning and SMCs. In the absence of objective memory impairment as indexed by the Rey Auditory Verbal Learning Test (RAVLT) and the Dementia Rating Scale-2nd Edition (DRS-2), higher levels of negative affect were associated with increased levels of SMCs. Moreover, a lower order negative affect factor, anxiety sensitivity, significantly moderated the relation between objective memory functioning and SMCs, after controlling for higher order measures of general negative affectivity. Findings suggest that negative affect, particularly anxiety sensitivity, distorts the subjective appraisal of one's own memory, such that people high on negative affect factors report more episodes of forgetting, even in the absence of objective cognitive impairments.