Diagnosis and treatment of breast cancer is a very emotionally aversive and stressful life event, which can lead to impaired cognitive functioning and mental health. Breast cancer survivors responding with repressive emotion regulation strategies often show less adaptive coping and adverse outcomes. We investigated cognitive functioning and neural correlates of emotion processing using ERPs. Self‐report measures of depression, anxiety, and fatigue, as well as hair cortisol as an index of chronic stress, were assessed. Twenty breast cancer survivors (BCS) and 31 carefully matched healthy controls participated in the study. After neuropsychological testing and subjective assessments, participants viewed 30 neutral, 30 unpleasant, and 30 pleasant pictures, and ERPs were recorded. Recognition memory was tested 1 week later. BCS reported stronger complaints about cognitive impairments and more symptoms of depression, anxiety, and fatigue. Moreover, they showed elevated hair cortisol levels. Except for verbal memory, cognitive functioning was predominantly in the normative range. Recognition memory performance was decreased in cancer survivors, especially for emotional contents. In ERPs, survivors showed smaller late positive potential amplitudes for unpleasant pictures relative to controls in a later time window, which may indicate less elaborative processing of this material. Taken together, we found cognitive impairments in BCS in verbal memory, impaired emotional picture memory accuracy, and reduced neural activity when breast cancer survivors were confronted with unpleasant materials. Further studies and larger sample sizes, however, are needed to evaluate the relationship between altered emotion processing and reduced memory in BCS in order to develop new treatment strategies.