Abstract Background Obesity and insulin resistance (IR) may negatively influence affect regulation in young adulthood. The paucity of studies that have investigated such associations have predominantly used functional magnetic resonance imaging. However, electroencephalography (EEG) can evaluate neural signatures in real‐time that may be complementary. Thus, this study investigated how adiposity and IR moderated brain activity and underlying affect regulation using EEG. Method Real‐time EEG was recorded in 28 lean and obese young adults with and without IR (18‐39 years, 46.4% female). Two event‐related potential (ERP) components of affect regulation, early posterior negativity (EPN) and late positive potential (LPP), were quantified from EEG data. Participants completed the Interactional Picture Affective System task to measure affect regulation, from which mean valence ratings and stimulus‐to‐response‐onset reaction times were calculated. ERP components and affect regulation parameters were then contrasted in three conditions, as follows: 1) Negative – Neutral; 2) Positive – Neutral; and 3) Negative – Positive. Height, weight, body fat percentage (%BF), and serum proteomics were collected. Fasting glucose and insulin readings were obtained to quantify Homeostatic Model Assessment for Insulin Resistance (HOMA‐IR). Hierarchical moderated regression analysis was utilized to test the interrelationships between adiposity, IR, neural activity, and affect regulation. Result Across all contrasted conditions, HOMA‐IR and %BF were found to moderate the relationships between frontal and parietal LPP amplitudes during the late latency window and affect regulation. Specifically, higher late frontal LPP amplitudes were associated with less negative and more positive valence ratings to unpleasant and pleasant stimuli, respectively, among participants with low, but not high, IR and %BF levels. In the Negative – Neutral and Negative – Positive conditions, lower late parietal LPP amplitudes were also associated with less negative overall valence ratings in response to unpleasant stimuli, but only in lean, insulin sensitive participants. These results overall suggest that modulation of negative and positive affectivity only occurs in lean young adults without IR. Conclusion Young adults with greater adiposity and IR showed worse affect regulation than those without obesity and IR. Furthermore, AD‐associated characteristics may start early in life, and EEG signatures may be a useful neuroimaging approach for tracking such events.