Anxiety results in sub-optimal motor learning, but the precise mechanisms through which this effect occurs remain unknown. Using a motor sequence learning paradigm with separate phases for initial exploration and reward-based learning, we show that anxiety states in humans impair learning by attenuating the update of reward estimates. Further, when such estimates are perceived as unstable over time (volatility), anxiety constrains adaptive behavioral changes. Neurally, anxiety during initial exploration increased the amplitude and the rate of long bursts of sensorimotor and prefrontal beta oscillations (13-30 Hz). These changes extended to the subsequent learning phase, where phasic increases in beta power and burst rate following reward feedback were linked to smaller updates in reward estimates, with a higher anxiety-related increase explaining the attenuated belief updating. These data suggest that state anxiety alters the dynamics of beta oscillations during reward processing, thereby impairing proper updating of motor predictions when learning in unstable environments.