Children interact with peers in their daily lives and sometimes help, share, or otherwise do something to benefit someone else. The opportunities they encounter to engage in prosocial behavior often overlap with their own and their peers' experiences of a range of emotions. The current study investigated the effects of children's own negative emotion and the effects of peer emotion on prosocial behavior. Children participated in one of four different emotion conditions in this study which had a 2 (child emotion: neutral or negative) x 2 (peer emotion: neutral or negative) factorial design. Children either played a version of a game designed to make them feel negative emotion or to feel neutral (child emotion) and then watched a version of a video of a peer who either expressed negative emotion or described feeling neutral (peer emotion). Children had multiple subsequent opportunities to behave prosocially towards the peer. Parent reports of children's emotion regulation and six different aspects of children's social cognition were used to investigate individual differences that relate to prosocial behavior that would potentially be moderated by own and other emotion. Results supported the hypothesis that children's own negative emotion experiences hinder prosocial behavior, though contrary to what was hypothesized, exposure to a peer's negative emotion had no effect on prosocial behavior. In addition, the links between individual differences in emotion regulation and social cognition and prosocial behavior were moderated by own and other emotion. Specifically, when children played the negative emotion version of the game, better social cognition was associated with greater sharing and lower social cognition was associated with less sharing. However, when children played the neutral version of the game, greater social cognition skills were associated with less prosocial behavior, and greater emotion regulation was associated with slower prosocial behavior. These findings are discussed in terms of how they advance our understanding of children's social information processing and subsequent prosocial behavior in different emotion contexts. Findings also indicate the importance of ecologically valid investigations of prosocial behavior, including examination of the emotion context, to better understand how children engage in prosocial behavior towards peers in their daily lives.