The agency facet of extraversion (aE) describes individual differences in goal-directed behavior and has been linked to dopamine function in incentive contexts. Because dopamine presumably modulates the processing of negative feedback/failure, aE may relate to failure processing in incentive contexts. To test this hypothesis, N = 86 participants performed a virtual ball-catching task. An incentive context was created by displaying potential rewards and subtle manipulations of task performance, which either was (control group) or was not (incentive context group) made explicit. To probe the involvement of dopamine, participants received either placebo or the selective dopamine D2 receptor antagonist sulpiride (200 mg). Failure processing was assessed through negative-feedback-evoked differences in the frontal midline theta electroencephalogram power (DFMT) and in the feedback-related negativity event-related potential component (FRN). Before incentives were introduced, DFMT (but not the FRN) was related to neuroticism/anxiety. Importantly, once incentives were displayed, aE was associated with DFMT, FRN, task performance, and changes in self-reported positive affect, which further depended on incentive context group and/or substance group: In the incentive context group but not in the control group, agentic extraverts showed relatively blunted DFMT after placebo. Sulpiride significantly enhanced DFMT, whereas it reduced FRN amplitudes and performance in agentic extra- versus introverts. These findings provide strong support for current dopamine models of aE and failure processing, and also highlight the importance of task context. Moreover, the dissociations of FRN and DFMT suggest the existence of two nonredundant electrophysiological indices of feedback processing, both relating to dopamine and aE.