Abstract Fear and reward learning can occur through direct experience or observation. Both channels can enhance survival or create maladaptive behavior. We used fMRI to isolate neural mechanisms of observational fear and reward learning and investigate whether neural response varied according to individual differences in neuroticism and extraversion. Participants learned object-emotion associations by observing a woman respond with fearful (or neutral) and happy (or neutral) facial expressions to novel objects. The amygdala–hippocampal complex was active when learning the object-fear association, and the hippocampus was active when learning the object-happy association. After learning, objects were presented alone; amygdala activity was greater for the fear (vs. neutral) and happy (vs. neutral) associated object. Importantly, greater amygdala–hippocampal activity during fear (vs. neutral) learning predicted better recognition of learned objects on a subsequent memory test. Furthermore, personality modulated neural mechanisms of learning. Neuroticism positively correlated with neural activity in the amygdala and hippocampus during fear (vs. neutral) learning. Low extraversion/high introversion was related to faster behavioral predictions of the fearful and neutral expressions during fear learning. In addition, low extraversion/high introversion was related to greater amygdala activity during happy (vs. neutral) learning, happy (vs. neutral) object recognition, and faster reaction times for predicting happy and neutral expressions during reward learning. These findings suggest that neuroticism is associated with an increased sensitivity in the neural mechanism for fear learning which leads to enhanced encoding of fear associations, and that low extraversion/high introversion is related to enhanced conditionability for both fear and reward learning.