As firms increasingly attempt to leverage existing brand equity, the possibility of brand dilution—which negatively affects the sources of brand equity—has also increased. Accordingly, there is a growing need to continuously monitor changes in consumer perceptions of the sources of one's own brand equity even after attempting to leverage brand equity. This study sought to examine how, in a situation where a focal brand with a moderate market position engages in co-branding with a superior or inferior brand, exposure to negative information about the co-branded new product affects consumer attitudes depending on information processing motivation and the market position of the alliance brand. Additionally, the study aimed to explore the cognitive processes underlying the brand dilution effect. The results showed that attitudes toward the focal brand changed more when information processing motivation was high than when it was low, and the effect of the alliance brand's market position on focal brand attitudes was also significant. Furthermore, an interaction effect between information processing motivation and alliance brand market position was found. However, the interactions between information presentation pattern and information processing motivation, and between information presentation pattern and alliance brand market position—which were considered to approach the cognitive processes of brand dilution—were not supported. Finally, both theoretical and practical implications of these findings were discussed.