Alcohol is often used to modulate mood states. Alcohol drinkers report that they use alcohol both to enhance positive affect and to reduce dysphoria, and alcohol-dependent patients specifically state reduction of negative affect as a primary reason for drinking. The current study proposes that alcohol cues may reduce negative affect in alcoholics. We used functional magnetic resonance imaging to examine brain activation in response to combination images that juxtaposed negative or positive International Affective Picture System (IAPS) images with an alcohol or non-alcohol-containing beverage. We found that in the absence of the alcohol cue, alcoholics showed more activation to negative than to positive images and greater activation than controls to negative images. When the IAPS images were presented with the alcohol cue, there was a decreased difference in activation between the positive and negative images among the alcoholics, and a decreased difference in response to the negative images between controls and alcoholics. Additionally, in the neutral-beverage conditions, anxiety ratings significantly predicted activation in the right parahippocampal gyrus but did not predict activation when the alcohol cues were presented. In conclusion, the alcohol cues may have modulated cortical networks involved in the processing of emotional stimuli by eliciting a conditioned response in the alcoholics, but not in the controls, which may have decreased responsiveness to the negative images.