This study examined if subcortical stroke was associated with impaired facial emotion recognition. Furthermore, the lateralization of the impairment and the differential profiles of facial emotion recognition deficits with localized thalamic or basal ganglia damage were also studied. Thirty-eight patients with subcortical strokes and 19 matched normal controls volunteered to participate. The participants were individually presented with morphed photographs of facial emotion expressions over multiple trials. They were requested to classify each of these morphed photographs according to Ekman's six basic emotion categories. The findings indicated that the clinical participants had impaired facial emotion recognition, though no clear lateralization pattern of impairment was observed. The patients with localized thalamic damage performed significantly worse in recognizing sadness than the controls. Longitudinal studies on patients with subcortical brain damage should be conducted to examine how cognitive reorganization post-stroke would affect emotion recognition.