Patients with epilepsy have a high prevalence of comorbid mood disorders. This study aims to evaluate whether negative affect in epilepsy is associated with dysfunction of emotion regulation. Event-related potentials (ERPs) are used in order to unravel the exact electrophysiological time course and investigate whether a possible dysfunction arises during early (attention) and/or late (regulation) stages of emotion control. Fifty epileptic patients with (n = 25) versus without (n = 25) comorbid negative affect plus twenty-five matched controls were recruited. ERPs were recorded while subjects performed a face- or house-matching task in which fearful, sad or neutral faces were presented either at attended or unattended spatial locations. Two ERP components were analyzed: the early vertex positive potential (VPP) which is normally enhanced for faces, and the late positive potential (LPP) that is typically larger for emotional stimuli. All participants had larger amplitude of the early face-sensitive VPP for attended faces compared to houses, regardless of their emotional content. By contrast, in patients with negative affect only, the amplitude of the LPP was significantly increased for unattended negative emotional expressions. These VPP results indicate that epilepsy with or without negative affect does not interfere with the early structural encoding and attention selection of faces. However, the LPP results suggest abnormal regulation processes during the processing of unattended emotional faces in patients with epilepsy and comorbid negative affect. In conclusion, this ERP study reveals that early object-based attention processes are not compromised by epilepsy, but instead, when combined with negative affect, this neurological disease is associated with dysfunction during the later stages of emotion regulation. As such, these new neurophysiological findings shed light on the complex interplay of epilepsy with negative affect during the processing of emotional visual stimuli and in turn might help to better understand the etiology and maintenance of mood disorders in epilepsy.