AbstractIn an electrophysiological experiment, we investigated the effect of reward expectation on the localized attentional interference effect using a cue‐target paradigm, while event‐related potentials (ERPs) were recorded. A cue indicating the reward condition of each trial (incentive vs. non‐incentive) was followed by the presentation of a search array containing two target items. Participants were asked to decide whether the two shape singletons (two triangles, two rectangles, or one triangle and one rectangle) among a set of circles were the same shape. Moreover, we manipulated the distance between the two targets to be adjacent to each other (Separation 1) or further apart (Separation 3 and Separation 5). Behavioral results revealed a larger reward facilitation effect for the larger target separation conditions. The N2pc component locked to the target display exhibited an interaction between reward expectation and the distance between the two targets. For non‐incentive trials, the N2pc amplitude increased as the separation between the two targets increased; however, for incentive trials, the N2pc showed comparable amplitudes in the different target separation conditions. These results indicate that reward expectation regulated attentional focus to better resolve the competition between representation and selection of the two targets for acquiring possible reward outcomes.