Memory retrieval is often challenged by other irrelevant competing memories that cause interference. This phenomenon is typically studied with the retrieval practice paradigm in which a category cue (e.g., Fruits) is presented together with an item-specific cue (e.g., Or::). Presentation of the category cue usually induces interference by reactivating competing memories (e.g., Banana, Apple, etc.), which is thought to be solved by means of inhibition, leading to retrieval-induced forgetting of these competing memories. Previous studies associated interference with an increase in medial prefrontal theta band (4–8 Hz) oscillations, but these studies could not disentangle the interference from the inhibition processes. We here used a retrieval practice procedure in which the category cue was presented before the item-specific cue to disentangle the interference from the inhibition signal. Furthermore, a competitive retrieval condition was contrasted with a noncompetitive condition. At a behavioral level, retrieval-induced forgetting was found in the competitive but not in the noncompetitive condition. At a neural level, presentation of the category cue elicited higher levels of theta power in the competitive condition, when compared with the noncompetitive retrieval condition. Importantly, this difference was localized to the ACC, which has been associated with the detection and mediation of interference. Additionally, theta power decreased upon presentation of the item-specific cue, and this difference was related to later forgetting. Our results therefore disentangle, for the first time, interference and inhibition in episodic memory retrieval and suggest that theta oscillations track the fine-grained temporal dynamics of interference during competitive memory retrieval.