Background: Mood-congruent processing biases are among the most robust research findings in neuropsychological studies of depression. Depressed patients show preferential processing of negatively toned stimuli across a range of cognitive tasks. The present study aimed to determine whether these behavioral abnormalities are associated with specific neural substrates. Methods: Ten depressed patients and 11 healthy control subjects underwent scanning during performance of an emotional go/no-go task using functional magnetic resonance imaging. The task allowed comparison among neural response to happy, sad, and neutral words, in the context of these words as targets (ie, stimuli to which subjects were required to make a motor response) or distractors (ie, stimuli to which the motor response was withheld). Results: Depressed patients showed attenuated neural responses to emotional relative to neutral targets in ventral cingulate and posterior orbitofrontal cortices. However, patients showed elevated responses specific to sad targets in rostral anterior cingulate extending to anterior medial prefrontal cortex. Unlike controls, patients showed differential neural response to emotional, particularly sad, distractors in the lateral orbitofrontal cortex. Conclusions: These findings suggest a distinct neural substrate for mood-congruent processing biases in performance. The medial and orbital prefrontal regions may play a key role in mediating the interaction between mood and cognition in affective disorder.