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Emotions usually occur in a social context; yet little is known about how similar and dissimilar others influence our emotions. In the current study, we examined whether ingroup and outgroup members have differential influence on emotion processing at the behavioral and neural levels. To this end, we recruited 45 participants to rate a series of images displaying people engaged in different emotional contexts. Participants then underwent an fMRI scan where they viewed the same images along with information on how ingroup and outgroup members rated them, and they were asked to rate the images again. We found that participants shifted their emotions to be more in alignment with the ingroup over the outgroup, and that neural regions implicated in positive valuation [ventral striatum (VS) and ventromedial prefrontal cortex (vmPFC)], mentalizing [dorsomedial prefrontal cortex (dmPFC), medial prefrontal cortex (mPFC), posterior superior temporal sulcus (pSTS), and temporal pole], as well as emotion processing and salience detection (amygdala and insula), linearly tracked this behavior such that the extent of neural activity in these regions paralleled changes in participants’ emotions. Results illustrate the powerful impact that ingroup members have on our emotions.