To investigate whether emotional arousal affects memorial feature binding, we had participants complete a short-term source-monitoring task—remembering the locations of four different pictures over a brief delay. On each trial, the four pictures were all either high arousal, medium arousal, or low arousal. Memory for picture-location conjunctions decreased as arousal increased. In addition, source memory for the location of negative pictures was worse among participants with higher depression scores. Two subsequent functional magnetic resonance imaging experiments showed that relative to low-arousal trials, high- and medium-arousal trials resulted in greater activity in areas associated with visual processing (fusiform gyrus, middle temporal gyrus/middle occipital gyrus, lingual gyrus) and less activity in superior precentral gyrus and the precentral-superior temporal intersect. These findings suggest that arousal (and perhaps negative valence for depressed people) recruits attention to items thereby disrupting working memory processes that help bind features together.