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The goal of this study was to examine the relation between real-world socio-emotional measures and neural activation to parental criticism, a salient form of social threat for adolescents. This work could help us understand why heightened neural reactivity to social threat consistently emerges as a risk factor for internalizing psychopathology in youth. We predicted that youth with higher reactivity to parental criticism (vs neutral comments) in the subgenual anterior cingulate cortex (sgACC), amygdala and anterior insula would experience (i) less happiness in daily positive interpersonal situations and (ii) more sadness and anger in daily negative interpersonal situations. Participants (44 youth aged 11–16 years with a history of anxiety) completed a 10-day ecological momentary assessment protocol and a neuroimaging task in which they listened to audio clips of their parents’ criticism and neutral comments. Mixed-effects models tested associations between neural activation to critical (vs neutral) feedback and emotions in interpersonal situations. Youth who exhibited higher activation in the sgACC to parental criticism reported less happiness during daily positive interpersonal situations. No significant neural predictors of negative emotions (e.g. sadness and anger) emerged. These findings provide evidence of real-world correlates of neural reactivity to social threat that may have important clinical implications.