Research on transcranial direct current stimulation (tDCS) has grown rapidly, but there is controversy regarding whether and how tDCS could impact memory performance. We report a study that addressed this question by examining the effects of oscillatory tDCS (otDCS) on subsequent episodic memory performance and concomitant recordings of neural oscillations. Neural oscillations in the theta band (4–7 Hz) have been shown to be important for episodic memory and especially for source memory retrieval. Here, we tested the effects of anodal otDCS at theta (5.5 Hz) over the left DLPFC on theta oscillations and memory performance. In two sessions, participants completed an item and source recognition paradigm with word stimuli. Between study and test, participants received otDCS in one session and sham stimulation in the other. Surprisingly, behavioral results showed that, relative to the sham stimulation, otDCS impaired source memory performance. Analyses of EEG data during memory retrieval revealed that otDCS changed pre-stimulus theta power and in particular reduced the specificity of theta activity during source memory retrieval. Our results suggest that non-invasive brain stimulation can impact memory and oscillatory activity in counterintuitive ways, and that direct neural activity measures can facilitate meaningful interpretation of behavioral effects of stimulation.