The ERN is a negative deflection in the event-related potential that peaks approximately 50 ms after the commission of an error. The ERN is thought to reflect early error-processing activity of the anterior cingulate cortex (ACC). First, we review current functional, neurobiological, and developmental data on the ERN. Next, the ERN is discussed in terms of three psychiatric disorders characterized by abnormal response monitoring: anxiety disorders, depression, and substance abuse. These data indicate that increased and decreased error-related brain activity is associated with the internalizing and externalizing dimensions of psychopathology, respectively. Recent data further suggest that abnormal error-processing indexed by the ERN indexes trait- but not state-related symptoms, especially related to anxiety. Overall, these data point to utility of ERN in studying risk for psychiatric disorders, and are discussed in terms of the endophenotype construct.