Observing others performing an action can lead to false memories of self-performance-the observation-inflation effect. Previous research has indicated that this phenomenon might impact the memory of actions in real-world interactions. However, whether direct observation without interaction can lead to observation inflation remains unclear. In Experiment 1, participants passively observed the experimenter performing actions live. In subsequent memory tests, they indeed reported false memories regarding their performances. Building on this, Experiment 2 investigated the causes of the observation-inflation effect induced by "real" actions. Participants underwent imitation-inhibition training with the individuals they observed previously. The results revealed that participants who completed imitation-inhibition training reported fewer false memories in memory tests than those who completed imitation training. These findings suggest that even passive observation of "real" actions can lead to observation inflation, and the simulation of others' actions by individuals may be a potential underlying cause of their occurrence in real-life situations.