Stress after retrieval can impair future remembering. These memory impairments may be attributed to a weakening of the original memory during reactivation-dependent reconsolidation or to the creation of competitive memory traces that can interfere with future retrieval. Although reconsolidation and interference theories predict forgetting, the neural mechanisms underlying potentially disruptive effects of post-retrieval stress on future remembering are completely unknown. Here, we used a three-day paradigm in which participants underwent functional MRI scanning during initial encoding of word-picture pairs (Day1), partial reactivation of these pairs shortly before a stress or control manipulation (Day 2), and a final cued-recall test (Day 3). Our results show that post-reactivation stress impairs subsequent memory depending on the strength of neural reinstatement of the memory trace during reactivation, as reflected in category-level reinstatement in ventrotemporal cortex (VTC), trial-wise hippocampal encoding-retrieval similarity and the connectivity of the hippocampus with the posterior cingulate cortex (PCC). Moreover, comparison of Day1 to Day3 memory representations in the PCC revealed that successful Day 3 recall was linked to Day1-Day3 pattern dissimilarity in controls, suggesting the use of a different trace, whereas stressed participants relied on the original memory representation. These neural representation changes were again dependent on VTC reinstatement during reactivation. Together, our findings suggest that the impairing effects of post-retrieval stress on future memory relate to the strength of reactivation of the original memory trace, driven by the hippocampus and its crosstalk with neocortical representation areas, revealing disruptive effects on the formation of multiple memory traces.