The angiotensin-II antagonist losartan is a promising candidate that has enhanced extinction in a post-traumatic stress disorder (PTSD) animal model and was related to reducing PTSD symptom development in humans. Here, we investigate the neurocognitive mechanisms underlying these results, testing the effect of losartan on data-driven and contextual processing of traumatic material, mechanisms proposed to be relevant for PTSD development. In a double-blind between-subject design, 40 healthy participants were randomised to a single oral dose of losartan (50 mg) or placebo, 1 h before being exposed to distressing films as a trauma analogue while heart rate (HR) was measured. Peritraumatic processing was investigated using blurry picture stimuli from the films, which transformed into clear images. Data-driven processing was measured by the level of blurriness at which contents were recognised. Contextual processing was measured as the amount of context information retrieved when describing the pictures' contents. Negative-matched control images were used to test perceptual processing of peripheral trauma-cues. Post-traumatic stress symptoms were assessed via self-report questionnaires after analogue trauma and an intrusion diary completed over 4 days following the experiment. Compared to placebo, losartan facilitated contextual processing and enhanced detail perception in the negative-match pictures. During the films, the losartan group recorded lower HR and higher HR variability, reflecting lower autonomic stress responses. We discuss potential mechanisms of losartan in preventing PTSD symptomatology, including the role of reduced arousal and increased contextual processing during trauma exposure, as well as increased threat-safety differentiation when encountering peripheral trauma-cues in the aftermaths of traumatic events.