Cognitive dysfunction is central to our understanding of mood disorders in terms of patient experiences, Diagnostic and Statistical Manual of Mental Disorders criteria, and psychological models. In this article, we highlight key findings from studies that have used neuropsychological tests and functional neuroimaging techniques to explore cognitive dysfunction in patients with depression and mania. In particular, we focus on affective processing bias, abnormal response to negative feedback, and decision making. Results are discussed in the context of current conceptualizations of dysfunctional neural circuitry, and in relation to important clinical research implications.