Emotional processing and brain activation were examined during an encoding and recognition paradigm using emotionally salient words in a sample of monozygotic twin pairs at low or high risk for anxiety and depression. Discordant twin pairs were used to chart the effects of environmental risk factors and concordant twin pairs were used to chart the effects of genetic risk factors on performance and brain activation. Performance data did not support the existence of a negative response bias in subjects at high risk. At the neural level, however, increased left inferior frontal gyrus (LIFG) activation by negative words was found in high-risk subjects, most prominently during recognition. Increased LIFG activity was found in subjects at high risk through either genetic or environmental risk factors. These results suggest that fMRI activation of the LIFG in a verbal emotional memory task may be a useful vulnerability marker for anxiety and depression.