Background.Abnormalities of emotion-related brain circuitry, including cortico-thalamic-limbic regions underpin core symptoms of bipolar disorder (BD) and major depressive disorder (MDD). It is unclear whether these abnormalities relate to symptoms of the disorder, are present in unaffected relatives, or whether they can predict future illness.Method.The Bipolar Family Study (BFS) is a prospective longitudinal study that has examined individuals at familial risk of mood disorder and healthy controls on three occasions, 2 years apart. The current study concerns imaging data from the second assessment; 51 controls and 81 high-risk (HR) individuals performing an emotional memory task. The latter group was divided into 61 HR individuals who were well, and 20 who met diagnostic criteria for MDD. At the time of the third assessment a further 11 HR individuals (from the Well group) had developed MDD. The current analyses focused on (i) differences between groups based on diagnostic status at the time of the scan, and (ii) predictors of future illness, comparing the 11 HR individuals who became unwell after the second scanning assessment to those who remained well.Results.All groups demonstrated typical emotional modulation of memory and associated brain activations. For analysis (i) the HR MDD group demonstrated increased thalamic activation v. HR Well. (ii) HR Well individuals who subsequently became ill showed increased activation of thalamus, insula and anterior cingulate compared to those who remained well.Conclusions.These findings suggest evidence for specific changes related to the presence of illness and evidence that changes in brain function in cortico-thalamic-limbic regions precede clinical illness.