Emotional potentiation may be a key variable in the formation of odor-associated memory. Two experiments were conducted in which a distinctive ambient odor was present or absent during encoding and retrieval sessions and subjects were in an anxious or neutral mood during encoding. Subjects' mood at retrieval was not manipulated. The laboratory mood induction used in Experiment 1 suggested that anxiety might increase the effectiveness of an odor retrieval cue. This trend was confirmed in Experiment 2 by capturing a naturally stressful situation. Subjects who had an ambient odor cue available and were in a preexam state during encoding recalled more words than subjects in any other group. These data are evidence that heightened emotion experienced during encoding with an ambient odor can enhance the effectiveness of an odor as a cue to memory.