We tested two explanations of the phonological similarity effect in verbal short-term memory: The confusion hypothesis assumes that serial positions of similar items are confused. The overwriting hypothesis states that similar items share feature representations, which are overwritten. Participants memorised a phonologically dissimilar list of CVC-trigrams (Experiment 1) or words (Experiment 2 and 3) for serial recall. In the retention interval they read aloud other items. The material of the distractor task jointly overlapped one item of the memory list. The recall of this item was impaired, and the effect was not based on intrusions from the distractor task alone. The results provide evidence for feature overwriting as one potential mechanism contributing to the phonological similarity effect.