This study examined patterns of neural response to feedback regarding betrayal and cooperation in adolescents with anxiety/mood disorders and healthy peers. We compared performance on and neural activation patterns during the Prisoner’s Dilemma (PD) game, an economic exchange task involving betrayal and cooperation, between age- and IQ-matched groups of adolescents with anxiety/depressive disorders (A/D) (N=13) and healthy controls (n=17). Participants were deceived to believe that their co-player (a pre-programmed computer algorithm) was another study participant. Although participants responded similarly following feedback that the co-player had cooperated with them on preceding trials, A/D adolescents were more likely than controls to cooperate following trials when the other player betrayed them. Further, A/D participants differed significantly from controls in patterns of neural activation in response to feedback that they had been betrayed. In particular, A/D participants showed more activation relative to baseline in the precuneus, cerebellum, and supramarginal gyrus than did controls. Groups did not, in contrast, differ significantly in patterns of activation in response to feedback that their co-player had cooperated with them. Our findings provide preliminary evidence that A/D adolescents may not only behave differently than do healthy peers when they encounter potential social obstacles, but that they may also engage a different set of neural resources. These findings offer a first step toward elucidating the mechanisms underlying social impairment in youth with internalizing disorders.