Hyperactivity of limbic (e.g., amygdalar) responses to negative stimuli has been implicated in the pathophysiology of generalized anxiety disorder (GAD). Evidence has also suggested that even a simple cognitive task involving emotionally salient stimuli can modulate limbic and prefrontal neural activation. However, whether neural modulation of emotional stimulus processing in a cognitive task is defective in adolescents with GAD has not yet been investigated. In this study, 20 adolescents with GAD and 14 comparable healthy controls underwent event-related functional magnetic resonance imaging (fMRI) coupled with an emotional valence evaluation task. During the evaluation of negative versus neutral stimuli, we found significant activation of the right inferior frontal gyrus (IFG) in healthy controls, while the bilateral amygdala was activated in GAD patients. Between-group analyses showed dramatically reduced task-activation of the right IFG in GAD patients, and the magnitude of IFG activity negatively correlated with symptom severity. Psychophysiological interaction analysis further revealed significantly decreased functional interaction between right IFG and anterior cingulate cortex and ventromedial prefrontal cortex in GAD patients compared with healthy controls. Taken together, our findings show failure to suppress negative affect by recruiting a cognitive distraction in adolescents with GAD, providing new insights into the pathophysiology of GAD.