The present study investigated the effect of emotion on response inhibition and error monitoring using event-related potentials. Participants performed an emotional stop-signal task that required response inhibition to briefly presented threatening and neutral visual stimuli. Negative, arousing pictures improved behavioral performance by decreasing the stop-signal reaction time and increasing the inhibitory rate, but had no enhancing effect on inhibitory processing at the electrophysiological level (N2–P3 complex). The perceptual processing of threatening stop-signals resulted in a larger and earlier N1 component. The Pe component, associated with conscious evaluation or affective processing of an error, was stronger in negative than in neutral trials. The stronger Pe correlated with superior task performance in the emotional condition. Prioritized perceptual processing of the stop-signal was associated with better conscious error monitoring. These results support the hypothesis that threatening, arousing stimuli improve behavioral inhibitory performance and error monitoring due to the enhancement of perceptual processing.