Background: Fragmentary blackouts, or memory loss for intoxicated events that may be later recalled with the provision of cues, are common sequelae of heavy drinking, yet understanding of their characteristics, correlates, and consequences is limited. Consequently, this alcohol‐administration study addressed questions regarding the etiology of fragmentary blackouts and their effect on alcohol outcome expectancies.Methods: A placebo‐controlled design addressed the etiology of fragmentary blackouts through assessment of memory formation before and after alcohol consumption. The effect of fragmentary blackouts on prospective beliefs about alcohol was assessed by way of a self‐report outcome expectancy questionnaire and a measure of response latency for alcohol concepts presented after beverage consumption.Results: Although participants performed similarly on memory indices before consuming beverages, those who reported past fragmentary blackouts and consumed alcohol displayed marked difficulty with recall of a narrative when this was attempted both during intoxication and after detoxification, as well as with a source memory task presented during intoxication. Those reporting fragmentary blackouts also endorsed stronger outcome expectancies for a range of alcohol effects and exhibited greater accessibility for positive alcohol concepts presented after beverage administration. Further, source recall contributed significantly to the episodic recall both during intoxication and after detoxification, as well as to positive outcome expectancies of those receiving alcohol.Conclusions: Findings suggest that fragmentary blackouts result from poor retrieval and that individual differences in retrieval emerge after alcohol is consumed. Further, one's recall of source aspects of material—its time and social context—is an important determinant of recall of stimuli and events encountered during intoxication, as well as of prospective expectations for positive alcohol effects. The collective findings expand our understanding of this complex yet common neuropsychological consequence of heavy drinking.