Depressive mood in adolescents with bipolar disorder (BDd) is associated with significant morbidity and mortality, but we have limited information about neural correlates of depression and treatment response in BDd. Ten adolescents with BDd (8 females, mean age = 15.6 ± 0.9) completed two (fearful and happy) face gender labeling fMRI experiments at baseline and after 6-weeks of open treatment. Whole-brain analysis was used at baseline to compare their neural activity with those of 10 age and sex-matched healthy controls (HC). For comparisons of the neural activity at baseline and after treatment of youth with BDd, region of interest analysis for dorsal/ventral prefrontal, anterior cingulate, and amygdala activity, and significant regions identified by wholebrain analysis between BDd and HC were analyzed. There was significant improvement in depression scores (mean percentage change on the Child Depression Rating Scale-Revised 57 % ± 28). Neural activity after treatment was decreased in left occipital cortex in the intense fearful experiment, but increased in left insula, left cerebellum, and right ventrolateral prefrontal cortex in the intense happy experiment. Greater improvement in depression was associated with baseline higher activity in ventral ACC to mild happy faces. Study sample size was relatively small for subgroup analysis and consisted of mainly female adolescents that were predominantly on psychotropic medications during scanning. Our results of reduced negative emotion processing versus increased positive emotion processing after treatment of depression (improvement of cognitive bias to negative and away from positive) are consistent with the improvement of depression according to Beck's cognitive theory.