Event-related potential (ERP) studies have shown that emotional stimuli elicit greater amplitude late positive-polarity potentials (LPPs) than neutral stimuli. This effect has been attributed to arousal, but emotional stimuli are also more semantically coherent than uncategorized neutral stimuli. ERPs were recorded during encoding of positive, negative, uncategorized neutral, and categorized neutral words. Differences in LPP amplitude elicited by emotional versus uncategorized neutral stimuli were evident from 450 to 1000ms. From 450 to 700ms, LPP effects at midline and right hemisphere frontal electrodes indexed arousal, whereas LPP effects at left hemisphere centro-parietal electrodes indexed semantic cohesion. This dissociation helps specify the processes underlying emotional stimulus encoding, and suggests the need to control for semantic cohesion in emotional information processing studies.