--- - |2+ Abstract Background Although severe irritability is a predictor of future depression according to recent meta‐analytic evidence, other mechanisms for this developmental transition remain unclear. In this study, we test whether deficits in emotion recognition may partially explain this specific association in youth with severe irritability, defined as disruptive mood dysregulation disorder (DMDD). Methods Participants aged 8–20 years (M = 13.3, SD = 2.8) included youth with DMDD, split by low depressive (DMDD/LD; n = 52) and high depressive (DMDD/HD; n = 25) symptoms, and healthy controls (HC; n = 39). A standardized computer task assessed emotion recognition of faces and voices of adults and children expressing happiness, fear, sadness, and anger. A Group (3) × Emotion (4) × Actor (2) × Modality (2) repeated measures analysis of covariance examined the number of errors and misidentification of emotions. Linear regression was then used to assess whether deficits in emotion recognition were predictive of depressive symptoms at a 1 year follow‐up. Results DMDD/HD youth were more likely to interpret happy stimuli as angry and fearful compared to DMDD/LD (happy as angry: p = 0.018; happy as fearful: p = 0.008) and HC (happy as angry: p = 0.014; happy as fearful: p = 0.024). In youth with DMDD, the misidentification of happy stimuli as fearful was associated with higher depressive symptoms at follow‐up (β = 0.43, p = 0.017), independent of baseline depressive and irritability symptoms. Conclusions Deficits in emotion recognition are associated, cross‐sectionally and longitudinally, with depressive symptoms in youth with severe irritability. Future studies should examine the neural correlates that contribute to these associations. - Depression and Anxiety, EarlyView.