The demands of social life often require categorically judging whether someone’s continuously varying facial movements express "calm" or "fear," or whether one’s fluctuating internal states mean one feels "good" or "bad." In two studies, we asked whether this kind of categorical, "black and white," thinking can shape the perception and neural representation of emotion. Using psychometric and neuroimaging methods, we found that (a) across participants, judging emotions using a categorical, "black and white" scale relative to judging emotions using a continuous, "shades of gray," scale shifted subjective emotion perception thresholds; (b) these shifts corresponded with activity in brain regions previously associated with affective responding (i.e., the amygdala and ventral anterior insula); and (c) connectivity of these regions with the medial prefrontal cortex correlated with the magnitude of categorization-related shifts. These findings suggest that categorical thinking about emotions may actively shape the perception and neural representation of the emotions in question.