Objective: The functioning of neural systems supporting emotion processing and regulation in youth with bipolar disorder not otherwise specified (BP-NOS) remains poorly understood. We sought to examine patterns of activity and connectivity in youth with BP-NOS relative to youth with bipolar disorder type I (BP-I) and healthy controls (HC). Method: Participants (18 BP-I youth, 16 BP-NOS youth, and 18 HC) underwent functional magnetic resonance imaging while performing two emotional-face gender labeling tasks (happy/neutral, fearful/neutral). Analyses focused on a priori neural regions supporting emotion processing (amygdala) and emotion regulation (ventromedial prefrontal cortex (VMPFC)), dorsolateral prefrontal cortex (DLPFC). Connectivity analyses used VMPFC as a seed region. Results: During the happy-face task, BP-I youth had greater amygdala, VMPFC, and DLPFC activity to happy faces whereas BP-NOS youth had reduced VMPFC and DLPFC activity to neutral faces relative to HC, and reduced amygdala, VMPFC, and DLPFC activity to neutral faces versus BP-I. During the fearful-face task, BP-I youth had reduced DLPFC activity to fearful faces whereas BP-NOS youth had reduced DLPFC activity to neutral faces relative to HC. BP-NOS youth showed greater VMPFC-DLPFC connectivity to happy faces relative to HC and BP-I youth. BP-I youth showed reduced VMPFC-amygdala connectivity to fearful faces relative to HC and BP-NOS youth. Conclusions: This is the first study to document differential patterns of abnormal neural activity in, and connectivity between, neural regions supporting emotion processing and regulation in BP-NOS versus BP-I youth. Findings suggest that despite similarities in symptom presentation, there are differential patterns of abnormal neural functioning in BP-NOS and BP-I relative to HC, which might reflect an "intermediate state" in the course of BP-I illness. Future longitudinal studies are needed to relate these findings with future conversion to BP-I/II. (Contains 3 figures and 4 tables.)