Individuals with autism spectrum disorder (ASD) have difficulties in understanding emotional language, but little research has discussed the developmental course of the processing of emotional words in the clinical population. Previous studies have revealed distinct processing for emotion-label (e.g., happiness) and emotion-laden (e.g., birthday) words in typically developing (TD) children and adolescents. Extending these findings, the study used event-related potentials (ERPs) to explore the processing of these two types of emotional words in children and adolescents with ASD. The stimuli included two-character Chinese words with factors of word type (emotion-label versus emotion-laden) and valence (positive versus negative). The participants were 11 to 14-year-old children and adolescents with ASD (N = 23) and age-matched TD peers (N = 23). They categorized emotion valence for words while their brain responses were recorded. Both the TD and the ASD groups exhibited emotional processing for all emotional words across the N400 and late positivity component (LPC). The emotional processing was modulated by word type but varied with group and valence. A trend for group differences was observed in processing positive words at 500-600ms. In particular, the emotion effects of positive emotion-label words were positively correlated with social dysfunction across all participants. These findings suggested that children and adolescents with ASD have a selective impairment in understanding emotional concepts from language. The ERP measurements may reflect atypical emotional word processing for individuals with higher autistic severity in positive valence contexts.