Recognizing facial emotions is an important aspect of interpersonal communication that may be impaired in Alzheimer's disease (AD). The authors examined facial emotion matching, facial emotion labeling, and same--different emotion differentiation in AD patients, healthy elderly volunteers, and elderly, nondemented psychiatric outpatients. Compared with both control groups, AD patients were significantly impaired on all three measures. AD patients were also impaired on a facial identity matching task. Using facial identity matching scores as a covariate provided evidence suggesting the facial emotion processing deficit may be independent of impairment in nonemotional face processing. AD patients also had selective impairment in labeling facial expressions of sadness. The authors conclude that patients with AD have deficits in recognizing facial emotions, which may be independent of their impairment in recognizing nonemotional features of faces.