It has frequently been observed that single emotional events are not only more efficiently processed, but also better remembered, and form longer-lasting memory traces than neutral material. However, when emotional information is perceived as a part of a complex event, such as in the context of or in relation to other events and/or source details, the modulatory effects of emotion are less clear. The present work aims to investigate how emotional, contextual source information modulates the initial encoding and subsequent long-term retrieval of associated neutral material (item memory) and contextual source details (contextual source memory). To do so, a two-task experiment was used, consisting of an incidental encoding task in which neutral objects were displayed over different contextual background scenes which varied in emotional content (unpleasant, pleasant, and neutral), and a delayed retrieval task (1 week), in which previously-encoded objects and new ones were presented. In a series of studies, behavioral indices (Studies 2, 3, and 5), event-related potentials (ERPs; Studies 1-4), and functional magnetic resonance imaging (Study 5) were used to investigate whether emotional contexts can rapidly tune the visual processing of associated neutral information (Study 1) and modulate long-term item memory (Study 2), how different recognition memory processes (familiarity vs. recollection) contribute to these emotion effects on item and contextual source memory (Study 3), whether the emotional effects of item memory can also be observed during spontaneous retrieval (Sstudy 4), and which brain regions underpin the modulatory effects of emotional contexts on item and contextual source memory (Study 5). In Study 1, it was observed that emotional contexts by means of emotional associative learning, can rapidly alter the processing of associated neutral information. Neutral items associated with emotional contexts (i.e. emotional associates) compared to neutral ones, showed enhanced perceptual and more elaborate processing after one single pairing, as indexed by larger amplitudes in the P100 and LPP components, respectively. Study 2 showed that emotional contexts produce longer-lasting memory effects, as evidenced by better item memory performance and larger ERP Old/New differences for emotional associates. In Study 3, a mnemonic differentiation was observed between item and contextual source memory which was modulated by emotion. Item memory was driven by familiarity, independently of emotional contexts during encoding, whereas contextual source memory was driven by recollection, and better for emotional material. As in Study 2, enhancing effects of emotional contexts for item memory were observed in ERPs associated with recollection processes. Likewise, for contextual source memory, a pronounced recollection-related ERP enhancement was observed for exclusively emotional contexts. Study 4 showed that the long-term recollection enhancement of emotional contexts on item memory can be observed even when retrieval is not explicitly attempted, as measured with ERPs, suggesting that the emotion enhancing effects on memory are not related to the task embedded during recognition, but to the motivational relevance of the triggering event. In Study 5, it was observed that enhancing effects of emotional contexts on item and contextual source memory involve stronger engagement of the brain's regions which are associated with memory recollection, including areas of the medial temporal lobe, posterior parietal cortex, and prefrontal cortex. Taken together, these findings suggest that emotional contexts rapidly modulate the initial processing of associated neutral information and the subsequent, long-term item and contextual source memories. The enhanced memory effects of emotional contexts are strongly supported by recollection rather than familiarity processes, and are shown to be triggered when retrieval is both explicitly and spontaneously attempted. These results provide new insights into the modulatory role of emotional information on the visual processing and the long-term recognition memory of complex events. The present findings are integrated into the current theoretical models and future ventures are discussed.