Three experiments investigated the interpersonal effects of anger and happiness in negotiations. In the course of a computer-mediated negotiation, participants received information about the emotional state (anger, happiness, or none) of their opponent. Consistent with a strategic-choice perspective, Experiment 1 showed that participants conceded more to an angry opponent than to a happy one. Experiment 2 showed that this effect was caused by tracking--participants used the emotion information to infer the other's limit, and they adjusted their demands accordingly. However, this effect was absent when the other made large concessions. Experiment 3 examined the interplay between experienced and communicated emotion and showed that angry communications (unlike happy ones) induced fear and thereby mitigated the effect of the opponent's experienced emotion. These results suggest that negotiators are especially influenced by their opponent's emotions when they are motivated and able to consider them.