Abstract Introduction Sustained and elaborative emotional information processing in depression and decreased affective elaboration in schizophrenia are considered hallmarks of these disorders but have not been directly measured. Gamma-band (35–45 Hz) EEG has been associated with semantic functions such as feature binding and may index these elaborative processing. This study examined whether there were group differences in baseline and sustained gamma-band EEG following emotional stimuli in healthy adults as well as adults with depression and schizophrenia. Methods 24 never-depressed healthy controls, 14 patients with DSM-IV unipolar major depressive disorder, and 15 patients with DSM-IV schizophrenia completed a lexical emotion identification task during EEG assessment. Gamma-band (35–45 Hz) EEG in response to negative words was the primary dependent measure. Results As predicted, depressed individuals displayed sustained and increased gamma-band EEG throughout the task, and particularly in the seconds following negative words. Individuals with schizophrenia displayed decreased gamma-band activity throughout the task. Conclusions These data suggest that gamma-band EEG, measured over several seconds, may serve as a useful index of sustained semantic information processing. Depressed individuals appear to engage in sustained elaboration following emotional stimuli, whereas individuals with schizophrenia are not as prone to this type of elaborative processing.