Obesity and insulin resistance (IR) increase the risk of mood disorders, which often manifest during young adulthood. However, neuroelectrophysiological investigations of whether adiposity and IR modify electrocortical activity and emotional processing outcomes remain underexplored, particularly in young adults. Therefore, this study used electroencephalography (EEG) to investigate whether obesity and/or IR moderate the relationships between brain potentials and affective processing in younger adults. Thirty younger adults completed a passive picture-viewing task utilizing the International Affective Picture System while real-time electroencephalography was simultaneously recorded. In the Negative-Neutral condition, lean and insulin-sensitive participants gave less negative valence ratings to unpleasant versus neutral images when late-window LPP amplitudes were larger, whereas this relationship was reversed in participants with obesity and absent in those with IR. Lean, insulin-sensitive young adults showed attenuated affective processing of unpleasant stimuli through stronger neural responses, whereas neural responses to pleasant stimuli did not vary across levels of body fat or IR.