We investigated facial recognition memory (for previously unfamiliar faces) and facial expression perception with functional magnetic resonance imaging (fMRI). Eight healthy, right-handed volunteers participated. For the facial recognition task, subjects made a decision as to the familiarity of each of 50 faces (25 previously viewed; 25 novel). We detected signal increase in the right middle temporal gyrus and left prefrontal cortex during presentation of familiar faces, and in several brain regions, including bilateral posterior cingulate gyri, bilateral insulae and right middle occipital cortex during presentation of unfamiliar faces. Standard facial expressions of emotion were used as stimuli in two further tasks of facial expression perception. In the first task, subjects were presented with alternating happy and neutral faces; in the second task, subjects were presented with alternating sad and neutral faces. During presentation of happy facial expressions, we detected a signal increase predominantly in the left anterior cingulate gyrus, bilateral posterior cingulate gyri, medial frontal cortex and right supramarginal gyrus, brain regions previously implicated in visuospatial and emotion processing tasks. No brain regions showed increased signal intensity during presentation of sad facial expressions. These results provide evidence for a distinction between the neural correlates of facial recognition memory and perception of facial expression but, whilst highlighting the role of limbic structures in perception of happy facial expressions, do not allow the mapping of a distinct neural substrate for perception of sad facial expressions.