Large language models generate fluent text that can contain unfaithful claims – a phenomenon known as hallucination. We present a multi-signal detection pipeline combining fine-tuned DeBERTa-v3 classification, Monte Carlo (MC) Dropout uncertainty quantification, and temperature-scaled calibration for response-level hallucination detection. Evaluated on the HaluEval benchmark, our pipeline achieves F1=0.915 and AUROC=0.977 on general-domain tasks, with per-task F1 scores of 0.97 (QA), 0.96 (Summarization), and 0.82 (Dialogue). MC Dropout inference further improves accuracy to 93.2%. A context ablation study confirms the model performs genuine entailment reasoning rather than exploiting surface patterns, with summarization F1 dropping 24% when knowledge context is removed. Learning curve analysis reveals that 25% of training data captures 77% of full-data performance. Beyond detection, we apply Direct Preference Optimization (DPO) to a Qwen2.5-0.5B generator, reducing its hallucination rate from 85.5% to 37.7% (55.9% relative reduction) as measured by our detector. Cross-domain evaluation on the SciFact biomedical benchmark shows that general-domain training transfers poorly (F1=0.52), motivating domain-specific fine-tuning. PubMedBERT fine-tuned on SciFact achieves F1=0.63 and AUROC=0.81, demonstrating that domain-matched pre-training is the strongest adaptation strategy. Code and models are available at GitHub - varunteja99/hallucination-detection-nlp: Domain-specific hallucination detection in LLM outputs using NLI, retrieval-augmented verification, and uncertainty quantification — CS 59300 NLP, Purdue University (Spring 2026) · GitHub

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