Whilst research has largely focused on the recognition of emotional items, emotion may be a more subtle part of our surroundings and conveyed by context rather than by items. Using ERPs, we investigated which effects an arousing context during encoding may have for item-context binding and subsequent familiarity-based and recollection-based item-memory. It has been suggested that arousal could facilitate item-context bindings and by this enhance the contribution of recollection to subsequent memory judgements. Alternatively, arousal could shift attention onto central features of a scene and by this foster unitisation during encoding. This could boost the contribution of familiarity to remembering. Participants learnt neutral objects paired with ecologically highly valid emotional faces whose names later served as neutral cues during an immediate and delayed test phase. Participants identified objects faster when they had originally been studied together with emotional context faces. Items with both neutral and emotional context elicited an early frontal ERP old/new difference (200-400 ms). Neither the neurophysiological correlate for familiarity nor recollection were specific to emotionality. For the ERP correlate of recollection, we found an interaction between stimulus type and day, suggesting that this measure decreased to a larger extend on Day 2 compared with Day 1. However, we did not find direct evidence for delayed forgetting of items encoded in emotional contexts at Day 2. Emotion at encoding might make retrieval of items with emotional context more readily accessible, but we found no significant evidence that emotional context either facilitated familiarity-based or recollection-based item-memory after a delay of 24 h.