Generalized anxiety disorder (GAD) is under-researched despite its high prevalence and large impact on the healthcare system. There is a paucity of functional magnetic resonance imaging (fMRI) studies that explore the neural correlates of emotional processing in GAD. The present study investigated the blood oxygen level dependent (BOLD) response to processing positive and negative facial emotions in patients with GAD. A total of 15 female GAD patients and 16 female controls undertook an implicit face emotion task during fMRI scanning. They also performed a face emotion recognition task outside the scanner. The only behavioural difference observed in GAD patients was less accurate detection of sad facial expressions compared with control participants. However, GAD patients showed an attenuated BOLD signal in the prefrontal cortex to fearful, sad, angry and happy facial expressions and an attenuated signal in the anterior cingulate cortex to happy and fearful facial expressions. No differences were found in amygdala response. In contrast with previous research, this study found BOLD signal attenuation in the ventrolateral and medial prefrontal cortex and the anterior cingulate cortex during face emotion processing, consistent with a hypothesis of hypo-responsivity to external emotional stimuli in GAD. These decreases were in areas that have been implicated in emotion and cognition and may reflect an altered balance between internally and externally directed attentional processes.