Behavioral habituation during repeated exposure to aversive stimuli is an adaptive process. However, the way in which changes in self-reported emotional experience are related to the neural mechanisms supporting habituation remains unclear. We probed these mechanisms by repeatedly presenting negative images to healthy adult participants and recording behavioral and neural responses using functional magnetic resonance imaging. We were particularly interested in investigating patterns of activity in insula, given its significant role in affective integration, and in amygdala, given its association with appraisal of aversive stimuli and its frequent coactivation with insula. We found significant habituation behaviorally along with decreases in amygdala, occipital cortex and ventral prefrontal cortex (PFC) activity with repeated presentation, whereas bilateral posterior insula, dorsolateral PFC and precuneus showed increased activation. Posterior insula activation during image presentation was correlated with greater negative affect ratings for novel presentations of negative images. Further, repeated negative image presentation was associated with increased functional connectivity between left posterior insula and amygdala, and increasing insula-amygdala functional connectivity was correlated with increasing behavioral habituation. These results suggest that habituation is subserved in part by insula-amygdala connectivity and involves a change in the activity of bottom-up affective networks.