Individual differences in cognition were studied in the form of the hypothesis that arousal, as indexed by personality measures of extraversion and neuroticism, affects the way in which verbal material is organized in memory. Subjects pretested on measures of these personality variables participated in either a paired-associates learning or a free-recall experiment. On the paired-associates task, subjects who were thought to be high on arousal made fewer errors when response terms were semantically similar than low arousal subjects. On the other hand, subjects thought low on arousal made fewer errors when response words were phonetically similar than high arousal subjects. On the free-recall task, low arousal subjects were found to cluster words together on the basis of semantic category at a higher rate than high arousal subjects. These results were taken to support the view that high arousal (as indexed by personality measures) leads to a focus on the physical aspects of verbal material, whereas low arousal leads to a memory organized around semantic aspects. The implications of these findings for other views of memory are discussed.