Abstract Background and Hypothesis Impairments in the expression, experience, and recognition of emotion are common in early psychosis (EP). Computational accounts of psychosis suggest disrupted top-down modulation by the cognitive control system (CCS) on perceptual circuits underlies psychotic experiences, but their role in emotional deficits in EP is unknown. Study Design The affective go/no-go task was used to probe inhibitory control during the presentation of calm or fearful faces in young persons with EP and matched controls. Computational modeling of functional magnetic resonance imaging (fMRI) data were performed using dynamic causal modeling (DCM). The influence of the CCS on perceptual and emotional systems was examined using parametric empirical bayes. Study Results When inhibiting motor response to fearful faces, EP participants showed higher brain activity in the right posterior insula (PI). To explain this, we used DCM to model effective connectivity between the PI, regions from the CCS activated during inhibition (dorsolateral prefrontal cortex [DLPFC] and anterior insula [AI]), and a visual input region, the lateral occipital cortex (LOC). EP participants exerted a stronger top-down inhibition from the DLPFC to the LOC than controls. Within the EP cohort, increased top-down connectivity between the LOC and AI was associated with a higher burden of negative symptoms. Conclusions Young persons with a recent onset of psychosis show a disturbance in the cognitive control of emotionally salient stimuli and the suppression of irrelevant distractors. These changes are associated with negative symptoms, suggesting new targets for the remediation of emotional deficits in young persons with EP.