Young infants use caregivers' emotional expressions to guide their behavior in novel, ambiguous situations. This skill, known as social referencing, likely involves at least 3 separate abilities: (a) looking at an adult in an unfamiliar situation, (b) associating that adult's emotion with the novel situation, and (c) regulating their own emotions in response to the adult's emotional display. The authors measured each of these elements individually as well as how they related to each other. The results revealed that 12-month-olds allocated more attention, as indicated by event-related potential measures, to stimuli associated with negative adult emotion than to those associated with positive or neutral emotion. Infants' interaction with their caregiver was affected by adult emotional displays. In addition, how quickly infants referenced an adult predicted both their brain activity in response to pictures of stimuli associated with negative emotion as well as some aspects of their behavior regulation. The results are discussed with respect to their significance for understanding why infants reference and regulate their behavior in response to adult emotion. Suggestions for further research are provided.