The way in which sex hormones influence cognitive and affective brain development is poorly understood. Despite increasing knowledge in the area of pediatric mood disorders, little is known about the influence of sex hormones on the regulation of emotion. Animal studies and preliminary human studies suggest a strong impact of testosterone on limbic structures such as the hippocampus and amygdala. We used functional magnetic resonance imaging (fMRI) to examine emotional processing in familial male-precocious puberty (FMPP), an extremely rare gonadotropin-independent form of precocious puberty characterized by early excess testosterone secretion. We compared this group (n = 7, mean age = 13 +/- 3.3 years) to healthy age and sex-matched controls (n = 14, mean age = 13 +/- 2.3 years). Participants were presented with emotional and neutral face stimuli and were required either to judge the hostility of the presented face, their subjective level of anxiety, or the width of the nose of the presented faces (nonemotional condition). In a fourth, passive viewing condition, no responses were required. Boys with FMPP responded faster to fearful faces during perception of threat compared to unaffected controls. Concurrently, fMRI data revealed significant differences in hippocampus activation in response to fearful faces relative to baseline whereas controls showed no differences. In contrast, no significant activation of the amygdala was found. These data are consistent with previous studies of the effects of sex hormones on brain function and support the role of testosterone on emotional development.