Antidepressant treatment reduces behavioural and neural markers of negative emotional bias early in treatment and has been proposed as a mechanism of antidepressant drug action. Here, we provide a critical test of this hypothesis by assessing whether neural markers of early emotional processing changes predict later clinical response in depression. Thirty-five unmedicated patients with major depression took the selective serotonin re-uptake inhibitor (SSRI), escitalopram (10 mg), over 6 weeks, and were classified as responders (22 patients) versus non-responders (13 patients), based on at least a 50% reduction in symptoms by the end of treatment. The neural response to fearful and happy emotional facial expressions was assessed before and after 7 days of treatment using functional magnetic resonance imaging. Changes in the neural response to these facial cues after 7 days of escitalopram were compared in patients as a function of later clinical response. A sample of healthy controls was also assessed. At baseline, depressed patients showed greater activation to fear versus happy faces than controls in the insula and dorsal anterior cingulate. Depressed patients who went on to respond to the SSRI had a greater reduction in neural activity to fearful versus happy facial expressions after just 7 days of escitalopram across a network of regions including the anterior cingulate, insula, amygdala and thalamus. Mediation analysis confirmed that the direct effect of neural change on symptom response was not mediated by initial changes in depressive symptoms. These results support the hypothesis that early changes in emotional processing with antidepressant treatment are the basis of later clinical improvement. As such, early correction of negative bias may be a key mechanism of antidepressant drug action and a potentially useful predictor of therapeutic response.