Objective: To examine the neural basis of impairments in interpreting facial emotions in children and adolescents with autism spectrum disorders (ASD). Method: Twelve children and adolescents with ASD and 12 typically developing (TD) controls matched faces by emotion and assigned a label to facial expressions while undergoing functional magnetic resonance imaging. Results: Both groups engaged similar neural networks during facial emotion processing, including activity in the fusiform gyrus (FG) and prefrontal cortex. However, between-group analyses in regions of interest revealed that when matching facial expressions, the ASD group showed significantly less activity than the TD group in the FG, but reliably greater activity in the precuneus. During the labeling of facial emotions, no between-group differences were observed at the behavioral or neural level. Furthermore, activity in the amygdala was moderated by task demands in the TD group but not in the ASD group. Conclusions: These findings suggest that children and adolescents with ASD in part recruit different neural networks and rely on different strategies when processing facial emotions. High-functioning individuals with ASD may be relatively unimpaired in the cognitive assessment of basic emotions, yet still show differences in the automatic processing of facial expressions. J. Am. Acad. Child Adolesc. Psychiatry, 2004;43(4):481-490. Key Words: amygdala, autism, facial expression, fusiform gyrus, functional magnetic resonance imaging.