There is mounting evidence that under some conditions the processing of facial identity and facial emotional expressions may not be independent; however, the nature of this interaction remains to be established. By using event-related brain potentials (ERP) we attempted to localize these interactions within the information processing system. During an expression discrimination task (Experiment 1) categorization was faster for portraits of personally familiar vs. unfamiliar persons displaying happiness. The peak latency of the P300 (trend) and the onset of the stimulus-locked LRP were shorter for familiar than unfamiliar faces. This implies a late perceptual but pre-motoric locus of the facilitating effect of familiarity on expression categorization. In Experiment 2 participants performed familiarity decisions about portraits expressing different emotions. Results revealed an advantage of happiness over disgust specifically for familiar faces. The facilitation was localized in the response selection stage as suggested by a shorter onset of the LRP. Both experiments indicate that familiarity and facial expression may not be independent processes. However, depending on the kind of decision different processing stages may be facilitated for happy familiar faces.