Abstract Introduction Insomnia is commonly linked with mood and anxiety-related disorders characterized by disrupted emotional memory processing. However, much remains unknown about the neurocognitive mechanisms underlying emotional memory processing among patients with insomnia. The current study seeks to examine the temporal dynamics of emotional memory processing among both patients with insomnia and healthy sleepers. Methods Thirty-four patients with DSM-5 insomnia disorder (23 females; Mage = 24.94) and 35 healthy sleepers (23 females; Mage = 23.91) encoded 48 pairs of pseudo-words and negative/neutral scene pictures in the evening, followed by overnight EEG-recorded sleep. All participants completed cued-recall memory tasks and affective ratings at pre-sleep, post-sleep, and 7-day delayed sessions. Results From the post-sleep to 7-day delayed sessions, patients with insomnia showed greater preservation of pictorial memory (ps < 0.001) and less dissipation of affective tone compared to the healthy sleepers (ps < 0.016). Moreover, among healthy sleepers, the product of post-encoding slow wave sleep (SWS) and rapid eye movement (REM) sleep duration predicted greater over-time negative memory decay (b = -0.001, p = 0.035), whereas REM duration predicted the dissipation of negative arousal ratings over time (b = -0.03, p = 0.041). Notably, these associations were not observed in the insomnia group. Conclusion These findings provide insight into the fundamental irregularities in emotional memory processing among patients with insomnia. For healthy sleepers, the results suggest a joint engagement of SWS and REM in promoting negative memory decay, and an adaptive role of REM sleep in facilitating the attenuation of affective arousal over time. Support (if any)