Generation usually enhances item memory and this effect manifests itself across a variety of encoding conditions. However, the influence of generation on context memory is most often negative and it seems to be sensitive to the kind and difficulty of the generation task, as well as the type of contextual details. In four experiments, the predictions from Mulligan's (2004) processing account were contrasted with the general resource tradeoff hypothesis. The results consistently indicated that an increase in generation difficulty leads to worse memory for context. However, when read items were compared with easy to generate items, the results resembled those predicted by the processing account. It seems that both the cognitive effort and the kind of processing promoted by the encoding task influence memory for context.