Incidental affective states tend to influence stereotyping in counterintuitive way: experimentally induced happiness leads to more stereotyping while experimentally induced sadness leads to less stereotyping. It was therefore predicted that happy subjects would a. would make more stereotype-consistent errors in memory task; b. attribute more stereotypical features to a specific ethnic group, and c. be less sensitive to ethnic discrimination in comparison to sad subjects. In a sample of 90 high school students from Belgrade, Serbia, differently valenced affects were successfully induced using 'autobiographic recollection' procedure. Experiment 1 showed that happy and sad subjects did not differ in the number of stereotype consistent errors in memory task. In experiment 2, however, happy subjects in comparison to sad subjects attributed more stereotypic traits to a non-stereotypical exemplar of a national category and expected him to behave more stereotypically in the future. Additionally, in thought listing task, happy subjects recorded more irrelevant and less story-focused thoughts in comparison to sad subjects. Finally, in Experiment 3 (N=66) sad subjects demonstrated more sensitivity to ethnic discrimination in comparison to happy subjects. These findings are discussed in terms of the impact of emotional experience on social information-processing strategies.