This study identified if key neural regions associated with empathy in adults showed significant activity while children (N=38) completed a neuroimaging task wherein they won and lost a game for themselves and for peers and witnessed peers’ subsequent happiness and sadness, which is inferred to elicit empathic happiness and sadness. Regions associated with affective sharing (anterior insula, dorsal anterior cingulate cortex, and amygdala), mentalizing (medial prefrontal cortex and dorsal medial prefrontal cortex), and emotion regulation (anterior cingulate cortex) showed significant activity, relative to a baseline, when children won and lost the game for themselves and for peers. There were not distinctions in degree of activity when sharing others’ positive compared to negative emotions, nor was there a significant effect of condition on activity in these regions. These results provide support at a neural level that empathic happiness and sadness during middle childhood involves affective sharing, mentalizing, and emotion regulation.