The ability to distinguish posed from genuine facial displays of emotion and to act accordingly is a fundamental social skill. To investigate the neural correlates underpinning this sensitivity, we compared changes in brain activity associated with judging posed and genuine facial displays of happiness and sadness using fMRI. Photographs of displays were presented to 7 right-handed females who judged whether the person was feeling the target emotion and made yes/no responses. Results showed activity increases during the observation of genuine compared to posed happy displays in the left medial superior frontal gyrus (BA 9) and the middle cingulate cortex bilaterally (BAs 24 and 31). The same comparison for sad displays showed increased activity in the left medial superior frontal gyrus (BA 8), and in the right middle and triangular inferior frontal gyri (both BA 46). Participants who exhibited higher sensitivity to sad displays showed larger activity difference in the left medial superior frontal gyrus (BA 8). The present study provides evidence of differential neural activity when judging posed versus genuine facial displays of emotions. Further research is required to elucidate how this might impact social affective neuroscience and in what ways genuine facial displays can enhance our understanding of emotion perception.