Emotions are conserved functional states influenced by both external stimuli and internal bodily signals. One key brain region implicated in the encoding of emotions and processing of bodily signals across species is the posterior insular cortex (pInsCtx). Recent work in mice has shown that optogenetically elevating heart-rate increases the activity of individual pInsCtx neurons as well as induces anxiety. Additionally, perturbing heart-to-brain communication using vagus nerve stimulation impedes fear extinction in a pInsCtx-dependent manner. However, we currently lack a mechanistic understanding of how the pInsCtx processes cardiac signals and how this contributes to the emergence of emotion states. To address this, we recorded pInsCtx activity during aversive and appetitive conditioning in mice in the presence or absence of the β-blocker metoprolol. To characterize the behavioral and physiological responses associated with positive and aversive emotion states, we monitored heart-rate, pupil diameter, whisker movement, facial expressions and locomotion. Our findings reveal that InsCtx activity represents emotion states of opposite valence, and that this representation is influenced by changes in heart-rate, more so than by changes in arousal or locomotion. Interestingly, single neurons in the insula can become precisely tuned to single heartbeats, and the tuning strength as well as the number of tuned neurons increases during emotion states. Metoprolol prevents this representation of cardiac signals by the pInsCtx, as well as disrupts emotion state encoding at both the neuronal and behavioral levels, suggesting that the processing of cardiac signals by the pInsCtx is necessary for emotion state coding.