We tested the proposal that signals of potential threat are given precedence over positive and neutral signals, reflected in earlier and more pronounced changes in neural activity. The temporal sequence ('when') and source localization ('where') of event-related potentials (ERPs) elicited by fearful and happy facial expressions, compared to neutral control expressions, were examined for 219 healthy subjects. We scored ERPs over occipito-temporal sites (N80, 50-120 ms; P120, 80-180 ms; N170, 120-220 ms; P230, 180-290 ms; N250, 230-350 ms) and their polarity-reversed counterparts over medial sites (P80, 40-120 ms; N120, 80-150 ms; VPP, 120-220 ms; N200, 150-280 ms; P300, 280-450 ms). In addition to scoring peak amplitude and latency, the anatomical sources of activity were determined using low resolution brain electromagnetic tomography (LORETA). Fearful faces were distinguished by persistent increases in positivity, associated with a dynamical shift from temporo-frontal (first 120 ms) to more distributed cortical sources (120-220 ms) and back (220-450 ms). By contrast, expressions of happiness produced a discrete enhancement of negativity, later in the time course (230-350 ms) and localized to the fusiform region of the temporal cortex. In common, fear and happiness modulated the face-related N170, and produced generally greater right hemisphere activity. These findings support the proposal that fear signals are given precedence in the neural processing systems, such that processing of positive signals may be suppressed until vigilance for potential danger is completed. While fear may be processed via parallel pathways (one initiated prior to structural encoding), neural systems supporting positively valenced input may be more localized and rely on structural encoding.