The understanding of emotions based on counterfactual reasoning was studied in children with high-functioning autism spectrum disorders (n = 71) and in typically developing children (n = 71), aged 6–12 years. Children were presented with eight stories about two protagonists who experienced the same positive or negative outcome, either due to their own action or by default. Relative to the comparison group, children with high-functioning autism spectrum disorder were poor at explaining emotions based on downward counterfactual reasoning (i.e. contentment and relief). There were no group differences in upward counterfactual reasoning (i.e. disappointment and regret). In the comparison group, second-order false-belief reasoning was related to children’s understanding of second-order counterfactual emotions (i.e. regret and relief), while children in the high-functioning autism spectrum disorder group relied more on their general intellectual skills. Results are discussed in terms of the different functions of counterfactual reasoning about emotion and the cognitive style of children with high-functioning autism spectrum disorder.