Psychotic Experiences (PEs) during adolescence index increased risk for psychotic disorders and schizophrenia in adult life. Working memory (WM) deficits are a core feature of these disorders. Our objective was to examine the relationship between PEs and WM in a general population sample of young people in a case control study. 4744 individuals of age 17-18 from Bristol and surrounding areas (UK) were analyzed in a cross-sectional study nested within the Avon Longitudinal Study of Parents and Children (ALSPAC) birth cohort study. The dependent variable was PEs, assessed using the semi-structured Psychosis-Like Symptom Interview (PLIKSi). The independent variable was performance on a computerized numerical n-back working memory task. Signal-Detection Theory indices, including standardized hits rate, false alarms rate, discriminability index (d′) and response bias (c) from 2-Back and 3-Back tasks were calculated. 3576 and 3527 individuals had complete data for 2-Back and 3-Back respectively. Suspected/definite PEs prevalence was 7.9% (N = 374). Strongest evidence of association was seen between PEs and false alarms on the 2-Back, (odds ratio (OR) = 1.17 [95% confidence intervals (CI) 1.01, 1.35]) and 3-back (OR = 1.35 [1.18, 1.54]) and with c (OR = 1.59 [1.09, 2.34]), and lower d′ (OR = 0.76 [0.65, 0.89]), on the 3-Back. Adjustment for several potential confounders, including general IQ, drug exposure and different psycho-social factors, and subsequent multiple imputation of missing data did not materially alter the results. WM is impaired in young people with PEs in the general population. False alarms, rather than poor accuracy, are more closely related to PEs. Such impairment is consistent with different neuropsychological models of psychosis focusing on signal-to-noise discrimination, probabilistic reasoning and impaired reality monitoring as a basis of psychotic symptoms.