Emotion regulation has important consequences for emotional and mental health (Saxena, Dubey & Pandey, 2011) and is dependent on executive function (Eisenberg, Smith & Spinrad, 2011). Because state anxiety disrupts executive function (Robinson, Vytal, Cornwell & Grillon, 2013), we tested whether state anxiety disrupts emotion regulation by having participants complete an instructed emotion regulation task, while under threat of unpredictable shock and while safe from shock. We used the late positive potential (LPP) component of the event related potential to measure emotion regulation success. We predicted that LPP responses to negatively valenced images would be modulated by participants’ attempts to increase and decrease their emotions when safe from shock, but not while under threat of shock. Our manipulation check revealed an order effect such that for participants who completed the threat of shock condition first self-reported state anxiety carried over into the subsequent safe condition. Additionally, we found that although instructions to regulate affected participants’ ratings of how unpleasant the images made them feel, instructions to regulate had no effect on LPP amplitude regardless of threat condition. Instead we found that participants who received the threat condition prior to safe had greater LPP responses to all images in the safe condition. We posit that the carryover of anxiety resulted in misattribution of arousal and potentiation of neural responses to the images in the safe condition. Thus, our results imply that physiological arousal and cognition combine to influence the basic neural response to emotional stimuli.