OBJECTIVE: Facial expressions communicate emotional states and regulate social bonds. An approach or avoidance-based valence might interact with direct or averted gaze to elicit different attentional allocation. These processes might be aberrant in major depression or first-episode psychosis and this requires empirical investigation. METHOD: This study examined higher order, controlled attentional processing of emotional facial expressions (happy, neutral, angry and fearful), with direct or averted gaze, using electroencephalogram (EEG) measures of the face-elicited Late Positive Potential (LPP), in young people diagnosed with major depression or first-episode psychosis, compared with a healthy control group. RESULTS: In the control group, there was no evidence of increased attentional allocation to emotional facial expressions, or to facial expressions with a matching emotional expression and gaze direction. There was no evidence, in the depression or first-episode psychosis groups, for a threat-based, attentional hypersensitivity to fearful or angry facial expressions, nor for this effect to be potentiated in response to angry direct or fearful averted gaze faces. However, the absence of such effects could not be concluded due to sample size and the absence of stimulus arousal and valence ratings. Importantly, there was significantly increased attentional allocation in the first-episode psychosis group to facial expressions regardless of emotional expression or gaze direction, compared to both the depression and control group. CONCLUSIONS: There might be an attentional hypersensitivity to facial expressions regardless of emotional expression or gaze direction in first-episode psychosis.