The field of developmental neuroscience is expanding rapidly, yet neuroimaging studies in children remain less common than in adults. Movie-watching paradigms may overcome this and further reduce head motion while increasing compliance when working with younger children. Here we characterize neural responses associated with emotion processing and regulation, utilizing a newly developed fMRI movie-watching paradigm. 55 children (6-14 years, 30 female) and 63 young adults (18-30 years, 31 female) watched a 12-minute montage of clips from the movie "Inside Out" (Docter & Del Carmen, 2015) during fMRI. Based on independent raters’ classifications, regressors (‘positive’ and ‘negative’ emotion processing) and contrast of interest (‘negative>positive’) were built and all results are presented using a cluster-level FWE-correction. Positive and negative emotion processing in both children and adults resulted in activation increases in corticolimbic brain regions previously associated with emotion processing and regulation (e.g., bilateral amygdala, thalamus/hippocampus, insula, and prefrontal cortex; Fig. 1). Notably, analyses revealed greater prefrontal cortex activation for ‘negative>positive’ processing, possibly indicating an increased use of emotion regulation during negative emotion processing. In adults, but not children, sex-specific differences in the neural correlates of emotional processing were observed, with females having higher activation in subcortical areas compared to males. Our findings suggest that the newly developed fMRI paradigm is suitable for assessing emotion processing and regulation in children and adults. Further research will integrate physiological recordings obtained simultaneously to fMRI to characterize the autonomic responses and their interaction with neural responses during the movie-watching paradigm.