Existing psychological theories posit valence and arousal as two dimensions along which subjective emotions’ states are represented. The present study sought to determine whether the emotional ratings projected along the valence–arousal axis during naturalistic stimulus viewing are further mapped in the neurodynamical attributes observed from noninvasive electroencephalography (EEG) in humans and their potential biophysical causes. While several studies have explored the periodic features of EEG dynamics of emotion processing, very few studies have previously explored the aperiodic (1/f) components vis-à-vis emotion arousal. Recent signal processing developments have established that segregating EEG time series into aperiodic and periodic components provides fundamental insights underlying neural computations, specifically excitatory–inhibitory balance. In this study, we identified that there is a significant increase in exponent and offset of aperiodic background during arousal. In contrast, there were no discernible variations between the aperiodic components during the differential valence scenarios. Reduction in periodic alpha power was observed with high arousal in line with previous studies. Finally, implementation of a biophysically realistic corticothalamic model of neural field activity allowed us to mechanistically explain that both the empirical observations of heightened arousal represented as higher slope of aperiodic background and decrease in power of the periodic alpha oscillations emerge from an increased inhibitory influence to relay nuclei of the thalamus.