Children who experience severe early life stress show persistent deficits in many aspects of cognitive and social adaptation. Early stress might be associated with these broad changes in functioning because it impairs general learning mechanisms. To explore this possibility, we examined whether individuals who experienced abusive caregiving in childhood had difficulties with instrumental learning and/or cognitive flexibility as adolescents. Fifty‐three 14–17‐year‐old adolescents (31 exposed to high levels of childhood stress, 22 control) completed an fMRI task that required them to first learn associations in the environment and then update those pairings. Adolescents with histories of early life stress eventually learned to pair stimuli with both positive and negative outcomes, but did so more slowly than their peers. Furthermore, these stress‐exposed adolescents showed markedly impaired cognitive flexibility; they were less able than their peers to update those pairings when the contingencies changed. These learning problems were reflected in abnormal activity in learning‐ and attention‐related brain circuitry. Both altered patterns of learning and neural activation were associated with the severity of lifetime stress that the adolescents had experienced. Taken together, the results of this experiment suggest that basic learning processes are impaired in adolescents exposed to early life stress. These general learning mechanisms may help explain the emergence of social problems observed in these individuals. Adolescents exposed to early stress showed diminished cognitive flexibility relative to controls when updating associations for stimuli associated with reward and punishment.