Our experience of time is often subject to distortions. For instance, time appears to slow down when unexpected events occur. Previous research has shown that the duration of infrequent stimuli – so-called oddballs – is commonly overestimated, an effect referred to as the temporal oddball effect. Oddballs are also known to cause a posterior P3, an event-related potential elicited by motivationally significant stimuli. Here, we propose that the temporal oddball effect and the posterior P3 share a common mechanism. We hypothesized that the P3 amplitude can be used to predict whether the duration of an oddball will be overestimated or not, even if this P3 precedes the offset of the stimulus. In our task, infrequent red targets were embedded in a series of white standards. All stimuli varied in duration and participants had to estimate the duration of the targets and some of the standards. Our data revealed that the duration of target oddballs, but not of standards, was overestimated and overestimations were associated with larger P3 amplitudes than correct short estimates. Because the P3 peaked before stimulus offset, this effect was independent of actual target oddball duration. Using multivariate pattern analysis, we provided direct evidence that it is indeed the P3 elicited by oddballs that caused this effect. Together, our results suggest that the temporal oddball effect is linked to the posterior P3. Based on these findings and established P3 theories, we propose that the common mechanism underlying both phenomena is a phasic norepinephrine response affecting the subjective experience of time.