The present study explored the hypothesis that anhedonia reflects an emotional memory impairment for pleasant stimuli, rather than diminished hedonic capacity in individuals with schizophrenia (SZ). Participants included 30 SZ and 30 healthy controls (HCs) subjects who completed an eye-tracking emotion-induced memory trade-off task where contextually relevant pleasant, unpleasant, or neutral items were inserted into the foreground of neutral background scenes. Passive viewing and poststimulus elaboration blocks were administered to assess differential encoding mechanisms, and immediate and 1-week recognition testing phases were completed to assess the effects of delay interval. Participants also made self-reports of positive emotion, negative emotion, and arousal in response to the stimuli. Results indicated that SZ experienced stimuli similarly to HC. Both groups demonstrated the typical emotion-induced memory trade-off during the passive viewing and poststimulus elaboration encoding blocks, as indicated by more hits for emotional than neutral items and fewer hits for backgrounds paired with emotional than neutral items. Eye-tracking data also indicated that both groups were more likely to fixate earlier and have longer dwell time on emotional than neutral items. At the 1-week delay, the emotion-induced memory trade-off was eliminated in both groups, and SZ showed fewer overall hits across valence conditions. Greater severity of anhedonia was specifically associated with impaired recognition for pleasant stimuli at the immediate recognition phase. Findings suggest that anhedonia in SZ is associated with emotional memory impairment, particularly a deficit in encoding positive stimuli. (PsycInfo Database Record (c) 2024 APA, all rights reserved).