Past research widely demonstrates the importance of employee emotional experiences and processes for individual and small group outcomes. However, theory for how organizations systematically differ in their affective processes and how these impact important organizational outcomes is lacking. To address this problem, we use organizational climate theory to advance the construct of affect climate and provide a conceptual foundation to understand its processes and effects in organizations. We propose that through various sources of climate, such as company practices, leaders, and routines, organizations can create environments that promote among employees (1) certain types of affective experiences or expressions, (2) specific uses of desirable affect for functional goals, and (3) particular ways to manage undesirable emotions and moods. We suggest that these three interrelated processes work together to form one of six unique affect climate types that we identify among organizations. Further, we develop theory to explain how each affect climate type differentially impacts four strategic outcomes of organizational units: relationship, productivity, creativity, and reliability performance. Ultimately, our theory positions affect climate as another key performance differentiator for organizations, and it provides knowledge of the specific affect climate types that enable or inhibit distinct strategic priorities.