The complex phenotype of Huntington’s disease (HD) encompasses motor, psychiatric and cognitive dysfunctions, including early impairments in emotion recognition. In this first functional magnetic resonance imaging study, we investigated emotion-processing deficits in 14 manifest HD patients and matched controls. An emotion recognition task comprised short video clips displaying one of six basic facial expressions (sadness, happiness, disgust, fear, anger and neutral). Structural changes between patients and controls were assessed by means of voxel-based morphometry. Along with deficient recognition of negative emotions, patients exhibited predominantly lower neural response to stimuli of negative valences in the amygdala, hippocampus, striatum, insula, cingulate and prefrontal cortices, as well as in sensorimotor, temporal and visual areas. Most of the observed reduced activity patterns could not be explained merely by regional volume loss. Reduced activity in the thalamus during fear correlated with lower thalamic volumes. During the processing of sadness, patients exhibited enhanced amygdala and hippocampal activity along with reduced recruitment of the medial prefrontal cortex. Higher amygdala activity was related to more pronounced amygdala atrophy and disease burden. Overall, the observed emotion-related dysfunctions in the context of structural neurodegeneration suggest both disruptions of striatal-thalamo-cortical loops and potential compensation mechanism with greater disease severity in manifest HD.