There is accumulating evidence that youths with antisocial behavior or psychopathic traits show deficits in facial emotion recognition, but little is known about the neural mechanisms underlying these impairments. A number of neuroimaging studies have investigated brain activity during facial emotion processing in youths with Conduct Disorder (CD) and adults with psychopathy, but few of these studies tested for group differences in effective connectivity – i.e., changes in connectivity during emotion processing. Using functional magnetic resonance imaging and psycho-physiological interaction methods, we investigated the impact of CD and psychopathic traits on amygdala activity and effective connectivity in 46 male youths with CD and 25 typically-developing controls when processing emotional faces. All participants were aged 16-21 years. Relative to controls, youths with CD showed reduced amygdala activity when processing angry or sad faces relative to neutral faces, but the groups did not significantly differ in amygdala-related effective connectivity. In contrast, psychopathic traits were negatively correlated with amygdala-ventral anterior cingulate cortex connectivity for angry versus neutral faces, but were unrelated to amygdala responses to angry or sad faces. These findings suggest that CD and psychopathic traits have differential effects on amygdala activation and functional interactions between limbic regions during facial emotion processing.