Sensory and emotional systems normally interact in a manner that optimizes an organism's ability to survive using conscious and unconscious processing. Pain and analgesia are interpreted by the nervous system as aversive and rewarding processes that trigger specific behavioral responses. Under normal physiological conditions these processes are adaptive. However, under chronic pain conditions, functional alterations of the central nervous system frequently result in maladaptive behaviors. In this review, we examine: (a) the interactions between sensory and emotional systems involved in processing pain and analgesia in the physiological state; (b) the role of reward/aversion circuitry in pain and analgesia; and (c) the role of alterations in reward/aversion circuitry in the development of chronic pain and co-morbid psychiatric disorders. These underlying features have implications for understanding the neurobiology of functional illnesses such as depression and anxiety and for the development and evaluation of novel therapeutic interventions.