The aim of this study was to determine brain activation during facial emotion discrimination in first-episode of psychosis. Eighteen patients underwent an fMRI while performing a facial emotion discrimination task during the acute episode, before starting antipsychotic drugs. A second fMRI and clinical evaluation were performed after evident clinical improvement. An equivalent control group underwent the same two fMRIs with a similar period of time between exams. The voxel-wise approach showed pre-treatment hypoactivation in ventro-limbic regions (cluster including right hippocampus and left amygdala; cluster size 528; p cluster <0.004) and facial perception involved in ventral-posterior regions (bilateral lingual gyrus, calcarine fissure and occipital superior gyrus, (k = 1,508, p < 0.001) and fronto-temporal regions. The region of interest approach also confirmed hypoactivation in right and left amygdala (cluster corrected p = 0.035 and 0.043, respectively). After treatment and clinical improvement, the voxel-wise approach showed a significant increase in activity in lingual gyrus and calcarine fissure in the group of patients. The regions of interest analysis showed an increase in amygdala activity during anger discrimination also in the group of patients. The results suggest a state-dependent model depicting a flattened and aberrant response of amygdala to emotion discrimination that could explain the seemingly contradictory previous findings of hypo- and hyper-amygdala activation.